SELECTIONS

U.S.A. FOREIGN MILITARY SALES:
1999 the Top Slot!

1999 height of US Foreign Military Sales Graph.

Summery background to Nostradamus X. LXXII:

Nostradamus X – 72 is a complicated but easy
assessment on the origins of the Tools for Armageddon. The Nostradamus
x. LXXII poem speaks of two world leaders, one defrays and one is
affected by the defrayment of things that resuscitates the age old
problem of perpetual competition. The only twist in this poem is it
speaks of the ancient Mars or Warrior Symbol as the consequences of
these actions. For political gain Clinton allows U.S. space-and- rocket
technology companies to assist China’s development of Weapons of Mass
destruction. The idea behind Clinton’s ideas were why have a democracy
be allowed as the only ideological form of government to posses weapons
of mass destruction. Why not give it to an oligarch of communist leaders
who orchestrated mass genocide on their own people during the second
half of the twentieth-century. Clinton’s ideas were born out of boredom.
He did not like the job of Presidency, he wanted to party with young
women, dance and enjoy life, and his reaction to taking on a job not
suited for him was to proliferate weapons of mass destruction in hopes
it will end his existence and others as suffering of others as it
excited him more than young interns, he believed.

In August of 2011 the Chinese Central Government
banned a myriad of American Pop-Cultural artifacts from permissiveness
in China’s domains – these Communist leaders appose cross-cultural
contamination. There is no evidence that neither the leaders of China
nor the leaders of the western worlds want to get along and allow
cultures to intermix. The Nostradamus prophecy-poem does not explain the
agent of launching of ICBMs and Tridents, East-Winds or other Chinese
nuclear missiles; it explains the origins of the tools of Armageddon.

Nostradamus' 1999 prophecy commences 2003, July 4th
Celebrations, with a big-bang! In these times of technological brilliance,
one cannot forget the “ill human problems” that placate out society. Leaders
cannot be held up as stellar intellects, when we have examples of Saddam
Hussein and Joseph Stalin. These were two “ill human problems” that plague
our society. The new breed are difficult to detect, they are the ones smart
enough not to be detected by Others. This is why we need prophets to point
the way. Nostradams famous 1999 prophecy points out for us, what we cannot
see. A understanding of the “ill human problems” that work for the
destruction of mankind. Nostradamus points us to war at hand – Nuclear War.
China has announced while Americans celebrate the beloved birthday of their
country, a missile show aimed at telling the western worlds they came to
intimidate them, launches – off with stunning success. Helped by the
identification of the “ill human problems” in the poem, the defrayed
material to make a fully operational nuclear weapons delivery system, the
“Dong Feng 31, named "East Wind" after a Maoist slogan, reportedly is
equipped with U.S. missile and warhead technology that was obtained by China
through espionage, and legal and illegal technology transfers from the
Clinton administration,” is about to be let loose. Fireworks extravaganza
with abilities to manipulate or wipe out large ecosystems is set to be
deployed and tested.

The PLA navy also announced plans to test its newest
long-range missile, the Julang (Great Wave) 2, or JL-2. Skipping and jumping
with joy, the fortune war reigns for the grand angolmois ( Men from the
east) with declarations July 1999 of Nolanda Hill’s testimony that "Clinton
meet with Chinese agents of espionage to plot the destruction of this
country."

Former President Bill Clinton and former Chinese
President Jiang Zemin celebrate this July 4th, with parties of
jubilation and the words of William Perry, Secretary of Defense of the
Clinton administration, congratulating the Chinese General Gen. Ding in a
letter in 1995 when the “resurrection” was taking place, "Let me close by
again conveying my respects to your on your National Day and by reiterating
my support for our bilateral military relationship" .

Richard Barth, Director of Non-Proliferation and Export
Controls, signed a memorandum for a Tuesday, June 22, 1993 meeting to
discuss allowing high-technology with military capabilities out of the
country to an enemy government. , which address all top-level U.S. security
agencies, with issues of relaxing export controls on high-technology, mainly
military applications, to China. These communiqué revealed trade missions to
Asia for sensitive technology spearheaded by aspiring U.S. business
companies for deals in the high-tech market, all riddled in double-speak of
non-threatening application. Since these documents came from the government
archives, addressed potential Weapons of Mass destruction technology
transfers, they tell of a confusing picture to what is being directly
discussed. When portions of the text emerge to address U.S. security
concerns, and a visible stamp is seen next to the black-out paragraph or
section address the response by the agency in charge to investigate possible
U.S. security risks, the most important sections appear in boxed-out black
portions of the page from these Freedom of Information Acts. This is not the
normal blacking out of the names of the head of CIA, which are, of course,
confidential; but black-out portions that address the previous sections on
national security possibilities. This, of course, would be incriminating
evidence, as anyone could argue there were real concerns of transferring
sensitive technology to the Chinese military.

August 19, 1998

The
China-Technology Transfer Handbook

Did the
President put a higher priority on commerce with China than on American
security?

Beginning in April, the New York Times
ran a series of articles that investigated the complex relationship between
the U.S. aerospace industry, the Clinton White House, and the People’s
Republic of China. The reporting detailed how the Clinton administration
re-prioritized technology transfer policies to the benefit of U.S. aerospace
companies—and possibly the benefit of Communist China’s nuclear missile and
space program.

Since then, many in Congress, the media, and
the foreign policy community have leveled serious questions about the role
the Clinton administration played in the transfer of sensitive technology to
China and whether these transfers affected national security.

The questions about national security and
missile proliferation are so sensitive, so far ranging, and so important
that at least six congressional committees have held hearings on the
subject. These include the Science, National Security, International
Relations, and Select Intelligence committees in the House; and the Senate
Government Affairs and Senate Select Intelligence committees.

Many stories have been written and many
questions have been raised. The scope of the situation seems to broaden in
its complexity with almost weekly revelations. The questions, which remain
largely unanswered, have sparked the creation of a select investigative
committee in the House, chaired by Rep. Christopher Cox.

This handbook is a compilation of the many
resources Congressional leaders are using as they try to determine if
America’s national security has been harmed. Its purpose is to make sense of
an ever-widening and complex scandal.

Index

Section 1

Information on
the Select Committee on U.S. National Security and
Military/Commercial Concerns with the People's Republic of China.

Section 2

Summary of
reports by the New York Times

Section 3.

Science
Committee Backgrounder

Section 4

Chronology of
Events: Prepared by Congressional Research Service page

Section 5

Glossary of
Terms

Section 6

Decision to
give technology export controls to Commerce Department: New York
Times, May 17, 1998

China targets
intercontinental ballistic missiles at United States: Reports by
Bill Gertz of the Washington Times

1.

Select Committee
on U.S. National Security and Military/Commercial Concerns with the People’s
Republic of China

On June 18, 1998, by a vote of 409 to 10,
the House of Representatives created a select committee to investigate
Clinton administration-approved technology transfers that may have resulted
in the improvement of China’s ability to deliver nuclear missiles. The
committee is also charged with exploring whether or not Clinton
administration policy was influenced by "political contributions, commercial
arrangements, or bribery, influence-peddling, or other illegal activities"
by the Peoples Republic of China.

Members of the Select Committee were
announced on June 19 by Speaker Gingrich and include the following nine
Members of Congress:

Chairman Christopher Cox of
California, Republican

Norm Dicks of Washington,
Democrat, Ranking Member

Porter Goss of Florida,
Republican, Vice Chairman

Doug Bereuter of Nebraska,
Republican

James Hansen of Utah, Republican

John Spratt of South Carolina,
Democrat

Curt Weldon of Pennsylvania,
Republican

Lucille Roybal-Allard of
California, Democrat

Bobby Scott of Virginia,
Democrat

The composition and break-down of the
committee were agreed to after consultation between both House Republican
and Democrat leaders.

The bipartisan mission of the committee is
defined in the legislation authorizing its creation, House Resolution 463.
Below are excerpts of the section defining the jurisdiction of the Select
Committee:

"SEC. 2. JURISDICTION. (a) IN
GENERAL - The Select Committee shall conduct a full and complete
inquiry regarding the following matters and report such findings and
recommendations, including those concerning the amendment of
existing law or the enactment of new law, to the House as it
considers appropriate:

"The transfer of technology,
information, advice, goods, or services that may have contributed to
the enhancement of the accuracy, reliability, or capability of
nuclear-armed intercontinental ballistic missiles or other weapons
of the People's Republic of China"

"The transfer of technology . . .
that may have contributed to the manufacture of weapons of mass
destruction, missiles, or other weapons" by Communist China.

"The effect of any transfer or
enhancement referred to in paragraphs (1) or (2) on regional
security and the national security of the United States."

"The conduct of the executive
branch of the United States Government with respect to the transfers
or enhancements referred to in paragraphs (1) or (2), and the effect
of that conduct on regional security and the national security of
the United States."

"The conduct of defense
contractors, weapons manufacturers, satellite manufacturers, and
other private or government-owned commercial firms with respect to
the transfers or enhancements referred to in paragraphs (1) or (2)."

"The enforcement of United States
law . . . with respect to the transfers or enhancements referred to
in paragraphs (1) or (2)."

"Any effort by the Government of .
. . China or any other person or entity to influence any of the
foregoing matters through political contributions, commercial
arrangements, or bribery, influence-peddling, or other illegal
activities."

"Decision-making within the
executive branch"

"Any effort to conceal or withhold
information or documents relevant to any of the foregoing matters or
to obstruct justice"

[The rest of H. Res 463 can be found in the
Congressional Record, June 18, 1998.]

2.

The New York
Times Series

In April of this year, New York Times
reporters Jeff Gerth, Raymond Bonner, John M. Broder, Eric Schmitt, and
David Sanger began a series of investigative articles that detailed the
curious relationship between the U.S. aerospace industry, the Clinton
administration and the Peoples Republic of China—and how this relationship
may have jeopardized American national security interests. Below is a brief
description of their reporting:

April 4
– Gerth and Bonner report that Loral Space and Communications and Hughes
Electronics are being investigated by a Federal grand jury for illegally
transferring ballistic missile technology to the Chinese. They also
report how the Clinton White House undermined this investigation when it
waived similar transfers for Loral in February 1998.

April 13
– Gerth probes the relationship between President Clinton and U.S.
aerospace interests and how these interests "tilt" their political
campaign contributions toward Democrats. He reveals that a 1997 Pentagon
report concluded that "United States national security has been harmed"
by a report Loral and Hughes gave China that may have been used to
improve the reliability and performance of Chinese rockets.

May 15
– Gerth details the exchange of contributions from Chinese aerospace
executive Liu Chao-ying (daughter of Liu Huaqing, a Chinese army general
and member of the Communist Politburo) through Democrat fund-raiser
Johnny Chung to the President Clinton’s 1996 re-election campaign.

May 17 (reprinted in this handbook)
– Gerth and Sanger explain the decision making process behind the
Clinton administration’s crucial decision to transfer control over
sensitive technology exports from the State Department to the Commerce
Department. Many have observed this decision contributed to a weakening
of national security priorities.

May 19
– Gerth reports that for the first time, Loral Space and Communications
admits providing a detailed report to Chinese aerospace executives on
the explosion of a Chinese rocket which may have contained "perfecting"
technology—without permission from the U.S. government.

May 23
– Broder and Gerth report on 394 Clinton administration documents
released to Congress. Among the documents were memorandums showing that
Clinton overruled the Justice Department in waiving satellite export
controls for Loral. The memos show that "President Clinton approved the
Chinese launching of an American satellite last February [1998] after
his top staff advised him that the economic and diplomatic advantages
outweighed the opposition of Federal prosecutors. The prosecutors had
warned that the approval would jeopardize their investigation into the
satellites maker’s earlier, unauthorized help to China’s rocket program
. . ."

June 1
– Broder and Gerth report how the Clinton administration ignored the
advice and warnings of both the Pentagon and the Justice Department in
allowing the launch of a Loral satellite on a Chinese rocket in February
of 1998.

July 17
– Gerth and Eric Schmitt report on White House documents that detail the
Clinton administration’s strategy to shift the approval process for
satellite sales. The documents revealed deep divisions between
administration officials, especially the late Commerce Secretary Ron
Brown and Secretary of State Warren Christopher. One of the key
supporters of the policy shift, national security advisor Sandy Berger,
viewed "himself as an arbiter between warring Cabinet secretaries . . ."

Mr. John
Pike
Director of Space Policy
Federation of American Scientists

Purpose of Hearing

The purpose of the hearing is to (1) discuss
the significance of information that may have been transferred by Loral and
Hughes to the People’s Republic of China; (2) examine the implications of an
improved Long March on U.S. national security, U.S. launch industry
competitiveness, and the U.S. industrial base; and (3) review components of
space-related agreements that the Administration has been negotiating with
the People’s Republic of China.

Background

Actions by Loral and Hughes are the catalyst
for the current controversy surrounding potential missile technology
transfer to China. The 1996 participation of Loral and Hughes in a launch
failure investigation resulted in the May 1997 Pentagon Report and the
current investigation by the Justice Department. Given the ongoing Justice
Department investigation, the February 1998 waiver by President Clinton for
export of a Loral-built satellite to be launched in China is also part of
the controversy. Other congressional hearings on this issue have focused on
the export control process, including the differences between the Bush
Administration and the Clinton Administration. The primary purpose of the
Science Committee hearing is to examine this issue from the standpoint of
the U.S. launch industry. [See Attachment A for a chronology of events
(1989-1998) prepared by Shirley Kan, Analyst in Foreign Affairs, Foreign
Affairs and National Defense Division of the Congressional Research
Service.]

Sanctions
-- People’s Republic of China

Launches of U.S.-built satellite on Chinese
rockets have been affected by two categories of sanctions imposed on the
People’s Republic of China: (1) Tiananmen Square sanctions; and (2) missile
proliferation sanctions.

Tiananmen Sanctions

In 1990, the United States imposed
post-Tiananmen sanctions as required by the Foreign Relations Authorization
Act for FY1990-1991 (P.L. 101-246). Section 902 (a) requires suspensions in
programs related to: (1) Overseas Private Investment Corporation, (2) Trade
and Development Agency, (3) exports of Munitions List items, (4)
exports of crime control equipment, (5) export of satellites for launch
by China, (6) nuclear cooperation, and (7) liberalization of export
controls. Suspensions (3) and (5) affect export of satellites to China.
Section 902 (b) allows Presidential waivers of the suspensions by reporting
that "it is in the national interest" to terminate a suspension.

Missile Proliferation Sanctions

Congress enacted explicit guidelines for
trade sanctions related to missile proliferation in 1990. A requirement for
the President to impose sanctions against U.S. persons or foreign persons
engaging in trade of items or technology listed in the Missile Technology
Control Regime (MTCR) Annex was added to the Arms Export Control Act
(Section 73(a)) and to the Export Administration Act of 1979 (Section
11B(b)(1)).

The Missile Technology Control Regime was
formed on April 16, 1987 when the governments of Canada, France, Italy,
Japan, the United Kingdom, the United States and West Germany agreed to
restrict the export of missiles and associated technologies that Third World
countries could use to develop unmanned, nuclear weapons delivery systems.
The Missile Technology Control Regime (MTCR) established a set of ground
rules for controlling sensitive missile-relevant transfers, with reference
to a detailed list of restricted items the exporting of which was either to
be licensed or prohibited altogether.

Section 73(a) of the Arms Export Control Act
requires sanctions against any U.S. citizen or any foreign person whom the
President determines to be engaged in exporting, transferring, conspiring to
export or transfer, or facilitating an export or transfer of, any equipment
or technology identified by the Missile Technology Control Regime that
contributes to the acquisition, design, development, or production of
missiles in a country that is not an MTCR adherent. Sanctions vary according
to the degree of sensitivity of the equipment or technology exported.

Category I violations involve the transfer
of a complete missile. Sanctions imposed as a result of a violation would
preclude the export of commercial communications satellites for launch from
the violating country. Category II violations involve the transfer of
missile-related equipment and technology. Category II sanctions do not
affect commercial communications satellites controlled by Commerce because
even though the satellites may contain missile-related components, Commerce
deems the components inaccessible.

Section 11B of the Export Administration Act
authorizes sanctions against U.S. persons and foreign persons who engage in
commercial transactions that violate missile proliferation controls.
Sanctions are required against any U.S. citizen who the President determines
to be engaged in exporting, transferring, conspiring to export or transfer,
or facilitating an export or transfer of, any equipment or technology
identified by the MTCR Annex.

Waivers

Since the imposition of Tiananmen sanctions
in 1990, President Bush and President Clinton have issued waivers for the
export of U.S.-origin satellites to be launched in China. Presidents Bush
and Clinton have issued at least 13 waivers for 20 satellite projects (on a
case-by-case basis) since the Tiananmen sanctions were imposed. [see
Attachment B] The Clinton Administration has considered issuing a blanket
waiver of Tiananmen sanctions on satellites in return for cooperation from
China in missile nonproliferation.

Loral and
Hughes

After the February 15, 1996 launch failure
of a Long March 3B rocket carrying a Loral-built satellite, Loral and Hughes
participated in a review of the Chinese accident investigation findings.
Hughes participated because a Hughes-built satellite, APSTAR 1A, was the
next satellite scheduled for launch on a Chinese Long March rocket. On April
10, 1996, the Chinese presented their preliminary determination that the
crash was caused by an open electrical circuit in the rocket’s "inertial
measurement unit" (which is the core of the guidance system). According to
the Chinese, the open circuit occurred because a particular solder joint
failed. When the circuit opened just after takeoff, the guidance system
provided the propulsion system with wrong information as to the position of
the rocket, causing the propulsion system to pitch the rocket sharply toward
the ground.

Given the history of Long March failures,
the insurance companies were unwilling to insure the next Long March launch
until a Western review of the accident investigation findings was conducted
and the review verified the Chinese findings. An Independent Review
Committee was formed with the following members:

Chairman of the Committee

Dr. Wah Lim
Senior Vice President and General Manager for Engineering and Manufacturing
Space Systems/Loral.

Mr. Robert Steinhauer
Chief Scientist
Hughes Space and Communications Company

The following experts from Loral
supported the committee:

Dr. Fred Chan
Senior Expert of Attitude Control and Platform

Dr. Jack Rodden
Principal Engineer Systems Analysis

Mr. Nabeeh Totah
Director of Spacecraft Engineering Department

Mr. Nick Yen
Senior Secretary of the Independent Review Committee.

Independent Review Committee

The President of Space Systems/Loral met
with Loral’s government security committee on April 11, 1996. A member of
the committee, Dr. Bryen (former head of the Defense Technology Security
Administration in DoD) suggested that Space Systems/Loral work with the
Department of State and have the department sign off on Loral’s response to
the People’s Republic of China prior to delivery of comments.

Two formal meetings of the Independent
Review Committee with the Chinese were held: (1) April 22-24, 1996 in Palo
Alto, California and (2) April 30-May 1, 1996 in Beijing. Minutes from both
meetings, the draft preliminary report, and final preliminary report were
sent to China Great Wall Industry Corporation (China’s launch company)
without prior submittal of the materials for review by the State Department.

Loral failed to notify the Defense
Department of the two meetings, thus no DoD monitors were present. DoD may
have failed in its responsibility to ask Loral, since the Loral/Hughes
investigation had been publicly announced. Further, Loral has stated that it
discussed the Independent Review Committee’s work with a number of U.S.
officials interested in China’s space program, while the review was being
conducted.

Written questions were given to China Great
Wall Industry Corporation (China Great Wall) at the first meeting. The
questions were prepared by Independent Review Committee (IRC) members and
staff based on previously received reports from China. IRC members and staff
asked numerous oral questions at the meetings to understand better the China
Great Wall analysis and conclusions.

Minutes of the first meeting were prepared
by Mr. Nick Yen of Loral and faxed to China Great Wall on April 25, 1996.
Minutes of the second meeting were prepared by Mr. Yen and faxed to China
Great Wall on May 6, 1996. After the second meeting, IRC members began
putting together the Preliminary Report.

Mr.Yen faxed a copy of the draft Preliminary
Report to China Great Wall on May 7, 1996. On May 9, 1996, Dr. Wah Lim
sought review from Space System/Loral’s General Counsel before formal
release of the final Preliminary Report.

On May 10, 1996, Space System/Loral’s
General Counsel attempted to halt distribution of the report not realizing
the draft had been faxed to China Great Wall on May 7, 1996. An hour
previous to this attempt to halt distribution on May 10, 1996, Mr. Yen faxed
the final version of the Preliminary Report, less attachments, to China
Great Wall.

On May 13, 1996, Mr.Yen faxed a copy of the
final Preliminary Report to Mr. Paul O’Conner of Johnson and Higgins
(insurance brokerage firm) in Beijing (Mr. Yen thought it was permissible to
send the report to U.S. insurers). The report was sent over a fax to a
Beijing hotel. This action is considered an "export" under the International
Traffic in Arms Regulations (ITAR) even though the recipient was a U.S.
person.

On June 15, 1998, staff from the House
National Security Committee, International Relations Committee, and Science
Committee were briefed on the export control process by officials from the
State Department, Commerce Department, Defense Technology Security
Administration, Arms Control and Disarmament Agency, and National Security
Council. When asked whether Loral was required to obtain a license to
participate in the 1996 launch failure investigation, David Tarbell, the
Director of the Defense Technology Security Administration (DTSA) stated
that DTSA always has viewed a launch failure analysis to be the conduct of a
defense service which requires a license.

On April 4, 1998, Jeff Gerth of The New
York Times reported on an inquiry into criminal activity by Loral and
Hughes. It was reported that Loral and Hughes assisted the Chinese in
improving the guidance systems of the Long March rocket in connection with
the investigation of the Long March 3B failure which occurred in February
1996. The Times article also reported that a February 1998 decision
by President Clinton to sign a waiver allowing Loral to launch another
satellite on a Chinese rocket was opposed by Justice Department officials
because it would be more difficult to prosecute the companies.

On April 13, 1998, Jeff Gerth of The New
York Times reported on a May 1997 Pentagon report which concluded that
scientists from Hughes and Loral had turned over expertise that improved the
reliability of China’s nuclear missiles. "One year later [May 1997] the
Pentagon completed its damage assessment of the incident. It concluded,
officials said, that ‘United States national security has been harmed.’"

Loral prepared a "fact sheet" that was sent
to the Science Committee on May 18, 1998. The document stated, "Allegations
that Space Systems/Loral provided missile guidance technology to the Chinese
are false." [See Attachment C] Loral has acknowledged that it was a "serious
mistake" not to have sought State Department approval prior to its IRC
activities. Loral further maintains that it is not clear that any violation
occurred with respect to technical data.

Pentagon Report

There have been numerous press accounts
about a May 1997 Pentagon report which concluded that expertise passed from
Loral and Hughes to the Chinese during the 1996 launch failure investigation
harmed U.S. national security.

The so-called "Pentagon Report" was produced
by a DoD agency, the Defense Technology Security Administration (DTSA).
Another report was prepared by an Air Force agency, the National Air
Intelligence Center (NAIC). There also have been press accounts of a CIA
report on the issue. State referred the Loral/Hughes technology transfer
issue to the Justice Department. The Justice Department then initiated a
criminal investigation into possible export control law violations by Loral
and Hughes.

The one-page analysis prepared by the CIA
(March 19, 1997) reportedly conflicts with the DTSA and Air Force reports.
This analysis reportedly stated that the IRC report did not raise
"proliferation concerns" that could harm U.S. security.

1998 Waiver

President Clinton, in February 1998,
approved a waiver for the Loral-built Chinasat 8 satellite to be exported
for launch in China. To approve a waiver of Tiananmen sanctions, the
President must determine that it is "in the national interest." Samuel
Berger, President Clinton’s national security adviser, sent a memorandum to
the President on the proposed waiver on February 12, 1998. Mr. Berger
recommended approval of the waiver by the President. Mr. Berger, in the
memorandum, acknowledged the concern of the Justice Department’s Criminal
Division that this waiver could have a significant adverse impact on any
prosecution that might take place, based on a pending investigation of
export violations by Loral.

Similarities between space launch vehicles and ballistic missiles

Dr. William Graham, former Deputy
Administrator of NASA and Science Advisor to Presidents Reagan and Bush,
stated at a recent congressional hearing, "There is a misperception that
ICBMs [Intercontinental Ballistic Missiles] are more sophisticated and
complex than space launch vehicles (SLVs). In reality, the opposite is true.
The preponderance of SLVs are ICBMs with additional elements....The
essential elements of an SLV are its propulsion, structure, staging,
guidance and control, ground support and launch equipment and procedures,
overall system integration, payload (the satellite), and payload
development. The essential elements of an ICBM are the same with the
exception of the payload, which for an ICBM is a reentry vehicle containing
some type of warhead, rather than a satellite."

Defense and State Department officials have
expressed their concerns about technologies "to integrate the satellite to
the launch vehicle because this technology can also be applied to launch
ballistic missiles to improve their performance and reliability.
Accelerometers, kick motors, separation mechanisms, and attitude control
systems are examples of equipment used in both satellites and ballistic
missiles.... They also expressed concern about the operational capability
that specific characteristics, in particular antijam capability, crosslinks,
and baseband processing, could give a potential adversary."

Former CIA Director James Woolsey testified
in 1993 before the Senate Governmental Affairs Committee, "... space launch
vehicle technology is very similar to and it is clearly applicable toward
developing ballistic missiles... the technologies for ICBM’s (sic) and space
launch vehicles are very close and in some cases virtually identical."

It was under Commerce controls that Motorola
and Lockheed Martin worked with the Chinese to launch a series of small
communications satellites known as Iridium. Several issues involving the
satellite dispenser (a dispenser is needed when launching multiple
satellites so that they can each be released individually) were resolved,
including proper mounting and release of the satellites, coupling load
analysis (explosive bolt usage to allow payload release without harm to
sensitive electronics), and attitude control.

This dispenser technology has direct
application to multiple independently targetable reentry vehicles (MIRVs).
China first decided to develop MIRVs for deployment in 1970. Development was
stalled in part, however, by a lack of capability to miniaturize warheads.
The priority for the project on MIRVs was lowered in March 1980, but
research and development on MIRVs resumed on November 10, 1983, as part of
the DF-5 modification program. Some are concerned that China’s use of
multi-satellite dispensers, or smart dispensers, to launch more than one
satellite on a Long March rocket has contributed to its development of MIRV
capability.

Due to the aforementioned similarities
between ballistic missiles and space launch vehicles, experience in one area
readily translates into the other. Thus, the more that China learns about
space launch vehicles, the more knowledge it will be able to apply to its
strategic nuclear forces. Anne Gilks, a British expert on the Chinese space
program, observed, "The relationship between China’s space and ballistic
missile programs (sic) has been close and often symbiotic." Gilks further
notes that experience with the Long March 2 space launch vehicle helped the
Chinese improve the guidance of their DF-4 (CSS-4) ballistic missile.

China is in the midst of a significant
modernization of its strategic nuclear forces and ballistic missile
capabilities. In 1994, Lieutenant General James Clapper, then Director of
the Defense Intelligence Agency, testified before the Senate that Chinese
modernization of its military was aimed at the United States. According to
Clapper, "China is modernizing both its conventional and strategic forces to
enable the PLA [People’s Liberation Army] to better support Beijing’s
political initiatives and China’s ability to compete with such countries as
Japan, Russia, and the U.S. both regionally and globally." A November
1997 report by the Department of Defense concluded, "China has embarked on a
ballistic missile modernization program. While adding more missiles and
launchers to its inventory, China is also concentrating on replacing
liquid-propellant missiles with mobile solid-propellant missiles, reflecting
concerns for survivability, maintenance, and reliability." More recently,
George Tenet, Director of Central Intelligence, testified before the Senate
Select Committee on Intelligence in January 1998 that, "Chinese military
modernization remains a key leadership goal. China is increasing the size
and survivability of its retaliatory nuclear missile force." Air Force
General Eugene Habiger, Commander of the U.S. Strategic Command, stated on
March 31, 1998 that China is engaged in a major nuclear modernization that
includes development of multiple-warhead missiles capable of hitting all
parts of the U.S. except southern Florida.

Until the 1980s, China’s policy was to be
self-sufficient in research and development capabilities to support this
modernization. However, by the mid-1980s the Chinese government determined
that it could accelerate its military modernization and reduce the cost of
modernization to China by gaining access to Western technology. Lieutenant
General Patrick Hughes, Director of the Defense Intelligence Agency,
testified before the Senate Select Committee on Intelligence in January that
"China will continue to actively seek advanced technology, including a
much-improved knowledge base from ‘overseas’ students, and from cooperative
nations and commercial partners, and will proliferate some technical
capabilities as it sells selected weapons systems to other countries."
Chinese officials themselves confirm that they are seeking to support
modernization through access to foreign technology. Zhu Yilin and Xu Fuxiang
of the Chinese Academy of Space Technology in Beijing listed one of China’s
goals in space as "Cooperating in international space technological
exchanges in various fields through multiple administrative levels and
channels to catch up and harmonize with the world’s advanced space
technology." (emphasis added)

Given the nature of space technology, which
can be used for both civilian and military purposes, the Chinese will be
able to modernize their military capabilities by acquiring ostensibly
"civilian" space technology. The Deputy Director of China’s Central Military
Commission, which is the body in the Chinese Communist Party responsible for
setting national military priorities, reportedly said that civilian
technologies would serve as the "foundation for developing science and
technology industries for national defence," and that China, "should pay
attention to turning advanced technology for civilian use into technology
for military use."

Additionally, the Chinese government decided
that it would help finance its strategic modernization by selling dual-use
space goods and services. China’s entry into the global launch market was
calculated to help raise funds to modernize its space launch
vehicle/ballistic missile technologies and capabilities. China’s launching
of U.S.-built satellites – worth up to a half-billion dollars in revenue to
date – has helped finance China’s own missile-modernization efforts and
missile exports to nations like Pakistan and Iran. Gilks notes, "China lacks
both the money and the technology to develop its space programme as quickly
as it would wish and has been keen to acquire foreign technology—but is
still constrained by a tight budget. However, the prospect of commercial
gain has allowed funding for limited joint ventures." Consequently, Chinese
military industries are engaging in commercial activity to generate revenues
that cover the overhead for military research and development. For example,
Gilks notes that in 1987, the Ministry of the Aerospace Industry, at the
time responsible for civil and military aviation and space technology
development in China, financed 66% of its overhead costs through commercial
activity.

The Ministry later was split into other
organizations. The Commission on Science Technology and Industry for
National Defense, (COSTIND) oversees space activities in China, with several
organizations reporting to it. Among them are the China National Space
Administration and the China Aerospace Corporation. China Great Wall
Industry Corporation, part of China Aerospace Corporation, markets
commercial space launch services. The China Great Wall Industry Corporation
and its research and development counterpart, the Chinese Academy of Launch
Technology, may continue to provide military services since no military
institutions dedicated to those functions were created when the Ministry of
Aerospace was split. Finally, China seeks to acquire the administrative and
management skills needed to conduct high-technology research and development
and translate the results into usable military power. Frankenstein and Gill
note, "As part of the reform process, efforts are underway to introduce
concepts of systems engineering, systems analysis, life-cycle management and
more ‘scientific decision-making’ into the [military] procurement process."
Yilin and Fuxiang, of the Chinese Academy of Space Technology, confirm that
China seeks to improve its management skills and "learn the foreign advanced
management mode," in order to improve its space capabilities. While such
issues do not receive the same attention as explicit technology transfers,
such as the sale of technology or the relation of design information,
teaching Chinese managers Western management techniques also is likely to
help China improve its space launch vehicle/ballistic missile capabilities.

The Chinese and
United States Launch Industry

China’s Launch Industry

China Great Wall Industry Corporation (China
Great Wall) has been China’s space launch company since 1986. It is a
state-owned corporation and belongs to China Aerospace Corporation which
oversees China’s space and missile research and development establishment.
China Aerospace Corporation develops strategic and tactical ballistic
missiles, space launch vehicles, surface-to-air missiles, cruise missiles,
and military and civilian satellites.

China Great Wall uses the Long March series
of rockets to launch satellites. Long March boosters also are produced as
China’s DF-4 and DF-5A ICBMs deployed in the Second Artillery, the strategic
missile force of the People’s Liberation Army (PLA). China has three launch
sites: Shuang Cheng-Tzu, Taiyuan, and Xichang. Xichang, in southeastern
China, is used for satellites destined for geostaionary orbit above the
equator.

China reportedly launched its first
satellite on April 24, 1970. By May 31, 1998, China had conducted 60
launches, of which eight were complete failures and four placed satellites
into incorrect orbits. This number includes five launch failures between
1973 and 1979 that have not been officially acknowledged by China, but are
counted by Western analysts. On April 7, 1990, Great Wall launched its first
commercial foreign satellite, Asiasat 1. [See Attachment D for a history of
Chinese space launches, prepared by Marcia S. Smith, Specialist in Aerospace
and Telecommunications Policy of the Science, Technology, and Medicine
Division of the Congressional Research Service]

United States’ Launch Industry

The rise of a competitive, global market for
commercial launch services in the past decade has cost U.S. launch service
providers their previous monopoly on launching commercial satellites. During
the 1970s, NASA was designing and building the Space Shuttle. It was decided
that once the Shuttle was operational, the U.S. expendable launch vehicles
would be phased out. In the early 1980s, production lines for the U.S.-built
Delta and Atlas rockets began to close down. In 1979, the European Space
Agency successfully launched its first Ariane 1 rocket and began to compete
for commercial payloads.

The Challenger tragedy in 1986 ended Shuttle
flights for 32 months. The U.S. share of the world commercial space
transportation market plummeted during this time and did not begin to
recover until 1990. After Challenger, U.S. policy changed to support a
"mixed fleet" approach using both the Shuttle and expendable launch
vehicles. There was a tremendous push to re-open production lines and get
U.S. expendable launch vehicles up and running in order to support the
backlog of U.S. government and commercial payloads.

The entry of China, Russia and Ukraine into
the commercial launch market has confronted U.S. launch providers with
non-market economy competitors who are able to undercut U.S. launch bids
significantly even under the terms of existing launch service trade
agreements.

In September 1988, the Reagan Administration
approved export of three satellites to be launched by China Great Wall on
the condition that China sign three international treaties related to
liability for satellite launches and other subjects; agree to price its
launch service "on a par" with Western companies; and establish a
government-to-government level regime for protecting technology from
possible misuse or diversion. China met the conditions and the two countries
signed a 6-year agreement in January 1989.

On June 5, 1989 after the Tiananmen Square
massacre, President Bush suspended all military exports to China. In 1989,
exports of communications satellites still were still governed by the State
Department’s Munitions List. The three satellite licenses, therefore, were
suspended as the satellites were deemed military exports. In December 1989,
the licenses were reinstated.

Launch Trade Agreement

The United States currently has launch trade
agreements with China, Russia, and Ukraine. The purpose of the agreements is
to manage the international market for launch services and reduce the impact
of low prices charged by non-market economies on U.S. launch providers. Two
of the conditions included in the 1989 agreement were that China would seek
to launch no more than nine international satellites between 1989 and 1994,
and that it would charge prices "on a par" with other launch service
providers. The six-year agreement signed in 1989 expired at the end of 1994.

A new seven-year agreement was signed on
March 13, 1995 allowing China up to 11 new launches for international
customers to geostationary orbit. Existing contracts for four launches under
the 1989 agreement were incorporated into the agreement, thus a total of 15
launches are allowable in the 1995-2001 timeframe. Neither reflights of
failed missions, nor launches of commercial payloads intended strictly for
internal Chinese use count against this quota. The 1995 agreement stipulated
that China was to charge no less than 15% below what Western companies
charge or a U.S. review of the price would be triggered (for example, if the
lowest Western bid is $100 million, the Chinese are not supposed to bid less
than $85 million). Under the 1995 agreement, China has conducted 6 launches
which count against the agreement, with 9 remaining through 2001.

One of the provisions of the agreement
allows for additional launches depending on the global launch rate. If the
total number of commercial launches to geostationary orbit in the world
averages 20 launches per year for the first three years of the agreement,
China is permitted an additional two launches. If the number of commercial
launches averages 20 per year for the first four years of the agreement,
China is permitted an additional three launches. From 1995-1997, 61
commercial launches to geostationary orbit occurred around the world.
Because the 20/per year average has been met over this three-year period,
China has qualified for the additional two launches under the agreement.
[See Attachment E for a table of U.S.-origin satellites launched by the
People’s Republic of China, prepared by Marcia S. Smith, Specialist in
Aerospace and Telecommunications Policy of the Science, Technology and
Medicine Division of the Congressional Research Service]

For low Earth orbit (LEO) launches, it was
agreed that China will be deemed in compliance of the agreement if China and
Russia combined do not win launch contracts to more than 50% of any
particular LEO satellite constellation (for example, Motorola’s Iridium
system). On October 27, 1997, the U.S. and China agreed to pricing
provisions for LEO launches. China agreed to price its LEO launches on a par
with U.S. and European launch companies.

United
States/China space cooperation

The U.S. and China signed an agreement on
Cooperation in Science and Technology in 1979. This agreement called for the
establishment of the U.S./People’s Republic of China Science & Technology
Joint Commission, to be co-chaired by the President’s Science Advisor and
his Chinese counterpart, the Chairman of the State Science and Technology
Commission. Biannual Joint Commission meetings were held through 1987. The
meeting planned for 1989 was canceled due to the Tiananmen Square massacre.
On May 22, 1991, the U.S. and People’s Republic of China (PRC) governments
renewed the overall Science & Technology Agreement, with an intellectual
property rights annex attached. The first U.S./PRC Science and Technology
Joint Commission Meeting since 1987 was held April 12, 1994.

In October 1996, a number of NASA officials
attended a conference in Beijing. The possibility of expanding cooperation
in Earth science was raised. Discussions held in 1996 and 1997 led to a
draft "umbrella" MOU which was submitted for interagency review. Several
concerns were expressed by various agencies about potential technology
transfer to the Chinese. In December 1997, NASA stated it would pursue
project-specific agreements. In February 1998, the National Security Council
staff inquired about space cooperation with the Chinese. The draft MOU was
modified to state clearly that no technology transfer would occur. NSC
incorporated the technology transfer wording changes to the "umbrella" MOU
and linked it to a larger non-proliferation package. It was decided later
that Chinese compliance with MTCR would be a prerequisite of pursuing the
umbrella MOU or else NASA could only pursue project-specific agreements. On
March 22-23, 1998, talking points about the revised MOU and MTCR
requirements were cleared by the interagency process and used by the State
Department-led nonproliferation delegation that visited China. The umbrella
MOU is still a part of the bigger non-proliferation package but there has
been no movement on China’s part to agree to comply with MTCR. The
possibility of project-specific agreements also still exists. Areas that
have been discussed for potential cooperation are: atmospheric science;
land-cover and land-use change; natural hazards; solid Earth science and
geodynamics; calibration and validation of new Earth science sensors and
data sets; and topographic mapping.

4.

Chronology

This chronology tracks the events relating
to technology transfers to China, commercial satellite launches, the actions
of both American and Chinese aerospace companies, and the policies of the
Bush and Clinton administrations. It is current through August of 1998 and
was compiled by the Congressional Research Service. It is featured in CRS
Report 98-485 F.

1989

Jan. 1989: The United States and China signed an
agreement for six years under which China agreed to charge prices for
commercial launch services "on a par" with Western competitors and to
allow China to launch nine U.S.-built satellites through 1994.

6/4/89: Crackdown on peaceful, political
demonstrators in Beijing.

12/19/89: President Bush waived sanctions for export
of Aussat-1, Aussat-2, and Asiasat communications satellites for launch
from China, under sec. 610 of the Department of Commerce, Justice, and
State, the Judiciary, and Related Agencies Appropriations act 1990 (P.L.
101-162).

4/7/90:
China Great Wall Industry Corporation, using a LM-3 rocket, launched a
foreign satellite, Asiasat (built by Hughes), for the first time.

1991

4/30/91: President Bush waived sanctions under Sec.
902(b) of P.L. 101-246 to allow exports of Aussat-1 and -2 and Freja
satellites for launch from China in part because China was not the
end-user. President Bush denied a license to export U.S. satellite
components for a Chinese satellite, Dongfanghong-3, citing "serious
proliferation concerns."

6/16/91:
The Bush Administration announced sanctions to be imposed on China for
transferring missile related technology to Pakistan. The sanctions
affected high technology trade with China, covering (1) high performance
computers, (2) satellites for launch from China (except for the Freja
and Aussat satellites), and (3) sanctions for missile proliferation as
required by the Arms Export Control Act and Export Administration Act
(imposed on China Great Wall Industry Corp. and China Precision
Machinery Import/Export Corp.). The U.S. sanctions were intended to
enforce the MTCR.

6/25/91:
The sanctions on the two Chinese state-owned companies for missile
proliferation in Pakistan took effect.

11/21/91:
After Secretary of State James Baker visited Beijing, the Chinese
foreign ministry issued a vague statement that China "intends to abide"
by the MTCR.

1992

2/1/92:
According to the Bush Administration, the Chinese foreign minister sent
a secret letter to the U.S. Secretary of State promising to abide by the
MTCR.

2/22/92:
The Chinese foreign ministry issued a statement saying that "China will
act in accordance with the guidelines and parameters of the existing
missile and missile technology control regime in its export of missiles
and missile technology," after the United States effectively lifts the
June 1991 sanctions.

3/22/92:
Aborted launch of Aussat (Optus-B1) satellite from China after LM-2E
rocket malfunctioned and the rocket stalled on the launch pad.
Beijing Review (Nov. 2-8, 1992) reported that the rocket’s
malfunction was caused by a fault in the ignition system which triggered
an emergency shut-down.

3/23/92:
The Bush Administration effectively waived the sanctions imposed in June
1991 on China for missile proliferation.

8/14/92:
China successfully launched the Optus-B1 satellite.

9/11/92:
President Bush waived sanctions under P.L. 101-246 to allow exports of
five satellites (Asiasat-2, Apsat, Intelsat-7A, Starsat, and AfriStar)
for launch from China and parts for China’s Dongfanghong-3.

10/23/92:
Under the Bush Administration, the State Department issued a rule to
amend section 38 of the Arms Export Control Act. The rule transferred
commercial communications satellites that do not have certain sensitive
characteristics (under nine categories) to the export licensing control
of the Commerce Department. Military satellites and communications
satellites with any of the nine categories of sensitive characteristics
remained on the State Department's Munitions List.

Nov. 1992:
According to President Clinton’s report to Congress submitted in May
1993, China may have supplied M-11 short-range ballistic missiles or
related technology to Pakistan. This transfer may have been taken in
retaliation for President Bush’s decision in September 1992 to sell F-16
fighters to Taiwan.

12/21/92:
A Chinese LM-2E launch vehicle exploded and destroyed the Australian
Optus-B2 satellite (built by Hughes) it was carrying. After the
explosion, Chinese officials denied that Chinese rockets were
responsible, blaming the satellite built by Hughes. Aviation Week and
Space Technology (Jan. 30, 1995) reported that Hughes and China
Great Wall Industry Corp. agreed to declare the cause of that failure to
be undetermined. Some experts, however, reportedly identified the
premature opening of the launch vehicle’s payload fairing as causing the
accident.

1993

2/11/93:
After renegotiating security procedures, the United States and China
signed a new agreement on satellite technology safeguards, superseding
the agreement of 12/17/88.

5/28/93:
President Clinton decided to extend most-favored-nation trade status to
China with conditions on human rights, but no linkage to weapons
proliferation. Nonetheless, after persistent reports that China was
continuing to transfer missile components to Pakistan — if not complete
M-11 short-range ballistic missiles, the President also reported to
Congress that "at present, the greatest concern involves reports that
China in November 1992 transferred MTCR-class M-11 missiles or related
equipment to Pakistan."

7/2/93:
President Clinton waived sanctions under P.L. 101-246 to allow exports
to China of Iridium and Intelsat-8 satellites for launch from China.

8/16/93:
Hughes and CGWIC issued a joint statement after seven months of
"vigorous and cooperative investigation" into the cause of the explosion
on 12/21/92. The statement did not identify a cause, with each side
denying blame.

8/24/93:
The Clinton Administration determined that China had shipped M-11
related equipment (not missiles) to Pakistan and imposed sanctions
required by the Arms Export Control Act and Export Administration Act.
The sanctions were imposed on Pakistan’s Ministry of Defense and 11
Chinese defense industrial aerospace entities, including China Great
Wall Industry Corp. The sanctions denied U.S. government contracts and
export licenses for missile equipment or technology (items in the MTCR
annex) for two years. Exports of satellites were affected because of
components such as "kick motors" used on missiles and installed on some
satellites to boost them into orbit.

8/26/93:
The U.S. aerospace industry lobby, including the Aerospace Industries
Association, called on the Clinton Administration to weaken the missile
proliferation sanctions.

8/31/93:
One week after imposing sanctions, Assistant Secretary of State Winston
Lord said that "we’re ready at any time to sit down with the Chinese,
both to try to find a way to lift the sanctions if they cooperate but
also to explain more fully the MTCR and its revised guidelines."

9/25/93:
National Security Adviser Anthony Lake told the Chinese ambassador that
the Clinton Administration was willing to negotiate a waiver of the
sanctions, but a more formal and binding Chinese commitment than the one
made in November 1991 was needed.

10/20/93:
The Washington Post reported that top executives of U.S.
satellite manufacturers, Martin Marietta Corp. and Hughes Aircraft Co.,
were lobbying intensively for the Clinton Administration to waive the
export ban for satellites. Reportedly due to these objections from
private industry (which were supported by the Commerce Department), the
National Security Council reviewed the decision to implement the
sanctions. In September 1993, Norman R. Augustine, chairman of Martin
Marietta, wrote a letter to Vice President Al Gore, arguing that the
sanctions "present U.S. companies as an unreliable supplier." Some
Members of Congress supported the export of satellites for launch from
China.

11/9/93:
The CEO of Hughes Aircraft Company, C. Michael Armstrong, delivered a
speech in which he objected to the inclusion in the sanctions of
commercial communications satellites. He also said that he "asked the
President of the United States to review the situation."

11/16/93: National Security Adviser Anthony Lake
wrote a memo to President Clinton proposing the NSC's interpretation of
the sanctions imposed in August to allow the export of two satellites
controlled by the Commerce Department, but not the five controlled by
the State Department. State had argued that all satellite licenses were
suspended under the sanctions, but Commerce argued that sanctions did
not cover any licenses. The President approved the NSC's recommendation

11/19/93:
President Clinton met with Chinese President Jiang Zemin at the Asian
Pacific Economic Cooperation (APEC) meeting in Seattle. On the eve of
the meeting, press reports said that the Administration had formally
proposed waiving the sanctions in return for another Chinese promise, in
more detail and with more authority, not to export MTCR-class missiles.
Senior officials reportedly argued in favor of a broad interpretation of
the law to allow the export of two of seven satellites.

1994

1/6/94:
The Clinton Administration announced a new policy exempting commercial
communication satellites from sanctions for missile proliferation
imposed on 8/24/93, facilitating export licenses for one Hughes and two
Martin Marietta satellites.

4/2/94:
A Chinese weather satellite exploded in a plant.

7/13/94:
President Clinton waived sanctions under P.L. 101-246 for the Echostar
satellite to be exported for launch from China.

10/4/94:
Secretary of State Warren Christopher and Foreign Minister Qian Qichen
issued a joint statement in which the United States agreed to waive the
August 1993 sanctions (for missile proliferation) and China agreed not
to export "ground-to-ground missiles" that are "inherently capable" of
delivering at least 500 kg to at least 300 km (an important
understanding meant in part to include the M-11 missiles under the MTCR
guidelines).

11/1/94:
The Administration’s waiver of the sanctions for missile proliferation
took effect.

11/30/94:
China launched its Dongfanghong-3 satellite, but failed to launch it
into the correct position due to a fuel leak.

Dec. 1994:
President Clinton selected Armstrong of Hughes to head the Export
Council.

1995

1/26/95:
A Chinese LM-2E launch vehicle exploded after liftoff, destroying the
Apstar-2 satellite (built by Hughes) it was carrying. Hughes and China
Great Wall Industry Corporation were reported as planning to determine
the cause of the explosion. (Aviation Week and Space Technology,
Jan. 30, 1995)

2/9/95:
The Wall Street Journal reported that Chinese aerospace industry
officials contradicted an official Chinese newspaper’s account that
blamed Hughes for the explosion on January 26, 1995. Instead of blaming
Hughes, as Ta Kung Pao (in Hong Kong) did, officials from China Great
Wall Industries Corp. and the China National Space Administration said
that the article did not reflect China’s official view and that the
investigation had not concluded. A spokesman for Hughes said that a
thorough investigation into the cause of the explosion would take months
to complete.

3/13/95:
The United States and China concluded a new agreement for 7 years to
allow China to launch up to 11 new satellites to geostationary orbit at
prices not less than 15 percent below that charged by Western
competitors.

7/21-28/95:
The PLA Second Artillery test-fired M-9 short-range ballistic missiles
toward Taiwan, after Taiwan’s president visited Cornell University in
June.

7/25/95:
Hughes and CGWIC issued a joint statement on separate findings of
six-month investigations into the cause of the explosion on 1/26/95.
CGWIC blamed strong winds for shaking Hughes’ satellite apart, while
Hughes said that severe winds caused the Chinese rocket’s fairing to
collapse.

8/15/95:
Hughes provided to the Department of Commerce the final report on the
investigation of the launch failure of Apstar-2. The report included a
summary of information conveyed to China Great Wall during several
meetings that took place from February to June 1995.

10/9/95:
Secretary of State Warren Christopher initialed a classified memorandum
to retain the State Department’s licensing authority over commercial
communications satellites (cited in New York Times, May 17,
1998).

11/28/95:
A Chinese LM-2E rocket launched the Asiasat-2 satellite (built by
Lockheed Martin), but the bumpy launch knocked the satellite’s
antenna-feed horns out of alignment, resulting in a loss of signal
power. Asiasat company claimed $58 million in insurance for the damage.
(Flight International, Oct. 2-8, 1996).

12/6/95: President Clinton issued Executive Order
12981 giving the Departments of State, Defense, and Energy, and the Arms
Control and Disarmament Agency authority to separately review export
license applications submitted to the Department of Commerce under the
Export Administration Act and relevant regulations.

2/6/96:
President Clinton waived sanctions under P.L. 101-246 for the Chinasat-7
satellite to be exported for launch from China.

2/6/96:
President Clinton waived sanctions under P.L. 101-246 for 2 Cosat (later
called Chinastar) satellites to be exported for launch from China.

2/6/96:
President Clinton waived sanctions under P.L. 101-246 for the Mabuhay
satellite to be exported for launch from China.

2/15/96:
A LM-3B rocket exploded after liftoff, destroyed the Intelsat satellite
(built by Loral), and smashed into a village. The death toll was
probably higher than the official report of six deaths and 57 injured.

3/8-15/96:
Despite the dramatic explosion of a Chinese rocket one month before, the
PLA’s Second Artillery again test-fired M-9 ballistic missiles toward
targets close to Taiwan’s ports, on the eve of Taiwan’s first
presidential election.

3/10-11/96:
In further deterioration of U.S.-China relations, the United States
deployed two carrier battle groups to waters off Taiwan, calling China’s
live-fire exercises "reckless" and "risky."

3/12/96:
President Clinton approved a memo written by then deputy national
security adviser Samuel R. Berger to reverse Secretary Christopher's
decision of October 1995 and transfer export control authority over
commercial satellites from the State Department to the Commerce
Department (New York Times, July 18, 1998).

3/14/96:
The Clinton Administration announced a decision to move commercial
communications satellites from the Munitions List to the Commerce
Control List of dual-use items, so that the export license jurisdiction
was moved from the Department of State to the Department of Commerce
(implemented in November 1996).

April 1996:
At China's request, Dr. Wah L. Lim, a Senior Vice President and engineer
at Loral, chaired a review committee to study China's technical
evaluation of the cause of the accident on Feb. 15, 1996. Loral says
China had identified the problem as residing in the inertial measurement
unit (IMU) of the guidance system of the rocket. Loral believed that it
did not have to request a U.S. government license and monitoring. The
first meeting was held in Palo Alto, CA, and the second, in China. The
Chinese participated in the two meetings.

5/7/96:
A draft preliminary report of the review committee was sent to all
participants of the meetings. The report confirmed that the cause of the
accident was an electrical flaw in the electronic flight control system.
The report allegedly discussed weaknesses in the Chinese rocket’s
guidance and control systems. (New York Times, April 13, 1998)

5/10/96:
Loral's executive in charge of export controls told Dr. Wah Lim not to
send the report to China.

5/13/96:
Loral’s executives provided the report to the Departments of State and
Defense.

6/17/96:
Loral provided a voluntary disclosure to the Department of State,
concerning all communications with China. The company argues that its
policy of consultation with the Department of State was not implemented,
but it did not violate U.S. laws.

6/23/96:
President Clinton waived sanctions under P.L. 101-246 for the Asia
Pacific Mobile Telecommunications (APMT) satellite to be exported for
launch from China.

7/3/96:
China launched the Apstar-1A satellite (built by Hughes) on a LM-3
rocket.

7/9/96:
President Clinton waived sanctions under P.L. 101-246 for a Globalstar
satellite to be exported for launch from China.

8/18/96:
China failed to launch its Chinasat-7 satellite (built by Hughes) into
the correct orbit, after the third stage of the LM-3 rocket shut down
early, reported the Far Eastern Economic Review (Aug. 29, 1996).

10/15/96:
President Clinton issued an Amendment to Executive Order 12981 (issued
on 12/6/95) concerning export licensing procedures for commercial
communications satellites and hot-section technologies for commercial
aircraft engines that are transferred from the State Department’s
Munitions List to the Commerce Department’s Commerce Control List (of
dual-use items).

10/21/96:
The Bureau of Export Administration of the Department of Commerce issued
regulations to implement the transfer of commercial satellites from
control under the Munitions List to the Commerce Control List.

11/5/96:
The Department of State issued regulations to implement the transfer of
commercial satellites from control under the Munitions List to the
Commerce Control List, even if the satellites include individual
components or technologies on the Munitions List.

11/19/96:
President Clinton waived sanctions under P.L. 101-246 for U.S. parts for
the Chinese Fengyun-1 (FY-1) meteorological satellite. The waiver cited
suspensions under sections 902(a)(3) and 902(a)(5), indicating that
technologies controlled under the Munitions List were involved.

11/23/96:
President Clinton waived sanctions under P.L. 101-246 for the Sinosat
satellite to be exported for launch from China. The waiver cited
suspensions under sections 902(a)(3) and 902(a)(5), indicating that
technologies controlled under the Munitions List were involved.

1997

March 1997:
The Air Force's National Air Intelligence Center (NAIC) reportedly
concluded in a classified report that Loral and Hughes provided
expertise that helped China to improve the guidance systems on its
ballistic missiles and that U.S. national security was damaged (Washington
Post, June 7, 1998). NAIC's report was sent to DTSA, the State
Department, and the Justice Department.

5/12/97:
China successfully launched its Dongfanghong-3 communications satellite,
built by China Aerospace Corp. on a LM-3A rocket, prompting personal
congratulations from top government and military leaders.

5/16/97:
A classified report at the Department of Defense’s Defense Technology
Security Administration (DTSA) concluded that Loral Space and
Communications Co. and Hughes Electronics had transferred expertise to
China that significantly enhanced the reliability of its nuclear
ballistic missiles and "United States national security has been harmed"
(New York Times, April 13, 1998 and June 27, 1998).

May 1997:
The U.S. Trade Representative (USTR) reported that China had violated
the pricing provisions of a bilateral agreement on the Mabuhay launch.

9/1/97:
China launched two test satellites for Iridium to demonstrate the
technical viability of the new Long March variant, LM-2C/SC.

9/10/97:
The Washington Times, citing Israeli and U.S. intelligence
sources, reported that China Great Wall Industry Corporation was
supplying key telemetry equipment (for sending and collecting guidance
data during flight tests) to Iran for its development of the Shahab-3
and Shahab-4 medium-range ballistic missiles.

Sept. 1997:
Likely prompted by DTSA’s report, the Department of Justice began its
criminal investigation into allegations that Loral and Hughes illegally
passed technical assistance to China. The investigation is still
ongoing.

10/27/97:
The USTR announced that the United States and China agreed on new
provisions for the Bilateral Agreement on Space Launch Services (signed
in 1995). The new provisions set clear terms for Chinese pricing of
launch services to low earth orbit.

Nov. 1997:
After a summit in Washington, Chinese President Jiang Zemin visited a
Hughes satellite plant in California.

12/8/97:
China launched two satellites for Iridium on one Long March 2C/SC rocket
to low earth orbit. The rocket had two stages and a smart dispenser on
top that deployed the two satellites. Some in the United States are
concerned that the technology used to launch more than one satellite at
once will help China in its suspected development of
multiple-independently targeted re-entry vehicles (MIRVs) for its ICBMs.

1998

2/12/98:
National Security Adviser Samuel Berger wrote a memorandum for President
Clinton on whether to waive post-Tiananmen sanctions for the export of a
Loral-built Chinasat-8 satellite. Berger noted that the Department of
State, with the concurrence of the Department of Defense and the Arms
Control and Disarmament Agency, recommended the waiver. However, "the
Criminal Division of the Justice Department has cautioned that a
national-interest waiver in this case could have a significant adverse
impact on any prosecution that might take place, based on a pending
investigation of export violations" by Loral. (printed in the New
York Times, May 23, 1998)

2/18/98:
President Clinton waived sanctions under P.L. 101-246 for the Chinasat-8
satellite (built by Loral) to be exported to China. Loral says that it
is the most powerful satellite that China has ever bought.

3/12/98:
Gary Samore, Special Assistant to the President and Senior Director for
Nonproliferation and Export Controls in the National Security Council,
wrote a Secret memo proposing to support Chinese membership in the MTCR,
issue a "blanket waiver" of the post-Tiananmen sanctions to cover all
future satellite launches, and increase the number of space launches
from China — in return for Chinese cooperation in missile
nonproliferation. (The classified memo was printed in the March 23,
1998, Washington Times.)

3/16/98:
Loral Space and Communications signed an agreement with China Great Wall
Industry Corp. to launch five of Loral’s communication satellites
between March 1998 and March 2002 using Long March-3B rockets.

3/22/98:
China Aerospace Corp. kicked off a Quality Promotion Plan to help ensure
success in its commercial launch business in research, production, and
testing.

3/26/98:
China launched two Iridium satellites, built by Lockheed Martin for
Motorola, on an improved LM-2C/SD rocket. (According to China, this
launch was China’s 15th "successful" commercial launch for
foreign customers since 1990.)

3/26/98:
John Holum, Acting Under Secretary of State for Arms Control and
International Security Affairs, concluded his visit to China and
confirmed that he discussed increasing the quota on the number of
satellite launches from China.

3/29/98:
A Hong Kong newspaper owned by the Chinese government reported that
China Aerospace Corporation found in its investigations into past failed
launches of satellites that all the failures were caused by problems in
production and management related to quality control. A previous
explosion of an LM-3B rocket (on 2/15/96) was found to have been caused
by a defect in a power pack nodal point which caused a short circuit
when the rocket ignited, resulting in a malfunction in the inertial
platform.

4/3/98:
China’s official news agency quoted Zhang Haiming, general-manager of a
division of Lockheed Martin, as saying that the company is "consulting
with the Chinese on satellite manufacturing."

4/4/98:
The New York Times reported that a Federal grand jury is
investigating whether Loral Space and Communications of New York and
Hughes Electronics of Los Angeles provided expertise to China that
"significantly advanced" the guidance systems of its ballistic missiles
in studying the accidental destruction in February 1996 of a satellite
built by Loral. Administration officials reportedly said that the
Department of Justice, fearing that its criminal investigation would be
undermined, opposed the President’s February 1998 waiver and approval
for export of similar technology to China (for Chinasat-8). Loral’s
chief executive was reported as the largest personal donor to the
Democratic National Committee for the 1996 election.

4/9/98:
John Holum, Acting Undersecretary of State for Arms Control and
International Security Affairs, stressed that exports of satellites to
China for launch occur with an export license and strict security
measures to "preclude assistance to the design, development, operation,
maintenance, modification or repair of any launch facility or rocket in
China, and we monitor that very carefully." He also confirmed that after
the accident in February 1996, the Department of State "became aware
that there may have been a violation." The case was referred to the
Department of Justice for investigation. He said that there are "strong
legal remedies" for violations of export control laws, including a
denial of future licenses.

4/13/98:
The New York Times again reported on the criminal investigation
of Loral and Hughes, adding that a highly classified Pentagon report
concluded in May 1997 that the companies had transferred expertise to
China that "significantly improved" the reliability of China’s nuclear
ballistic missiles.

4/15/98:
Loral’s president and chief operating officer, Gregory Clark, stated
that Loral "did not divulge any information that was inappropriate."

4/16/98:
A Chinese Foreign Ministry spokesman stated that "the exchange of
technical information about satellite launchings between U.S. companies
and the Chinese aerospace department was a normal activity and fell
under international rules." He also said that the companies "did not
provide technical information about missile technology."

4/21/98:
Loral’s chairman and CEO, Bernard Schwartz, said that "we have done our
own internal investigation, and I’m satisfied that our people acted well
— good behavior and in compliance [with U.S. export control
regulations]."

4/28/98:
Under Secretary of Commerce for Export Administration William Reinsch
testified to the Joint Economic Committee that satellite exports to
China have shown how effective dual-use export controls allow U.S.
exporters to compete and "win without risk to our national security." He
said that controls on satellite exports to China are extensive and
include measures to "reduce the risk" of illicit technology transfers.
Since November 1996 (when the licensing jurisdiction was transferred
from the Department of State to Commerce), Commerce issued three export
licenses for satellites to be launched from China — "with the
concurrence of all agencies."

4/30/98:
A spokesman at the State Department, James Foley, denied a Washington
Times report that the Administration presented China with a draft
agreement for space cooperation. He admitted, however, that officials
have considered scientific space cooperation as one way to encourage
Chinese cooperation in missile non-proliferation. He also stressed that
"there still is not any U.S. plan or proposal to offer China access to
missile technology."

5/2/98:
A Chinese Long March 2C/SD rocket launched two Iridium satellites (built
by Lockheed Martin) to low earth orbit.

May 1998:
The Justice Department began a preliminary inquiry into whether
political donations influenced President Clinton’s approval of
satellites to China.

5/15/98:
The New York Times reports that fund-raiser Johnny Chung told the
Justice Department that part of his donations to the Democratic Party in
the summer of 1996 came from the PLA through Liu Chaoying, a PLA
lieutenant colonel (possibly retired) and a senior manager and vice
president for China Aerospace International Holdings, Ltd. (a subsidiary
of China Aerospace Corporation in Hong Kong). She is also a daughter of
retired General Liu Huaqing, formerly a vice chairman of the PLA’s
command, the Central Military Commission, and formerly a member of the
Standing Committee of the Politburo.

5/18/98:
Loral issued a statement saying that allegations that it provided
missile guidance technology to China are false. The company states that
"the Chinese alone conducted an independent investigation of the launch
failure [in February 1996] and they determined that the problem was a
defective solder joint in the wiring — a `low-tech’ matter."

June 1998:
The Justice Department expanded its investigation to examine whether
Hughes violated export control laws in transmitting a report to China on
the launch failure on January 26, 1995 that destroyed the Apstar-2
satellite. The Commerce Department had approved Hughes' report.

7/2/98:
The State Department suspended the license issued in 1996 for Hughes
that permitted Shen Jun, son of a Chinese lieutenant general, to work on
a $500 million satellite deal for Asia Pacific Mobile
Tele-communications (APMT) consortium. Lt. Gen. Shen Rongjun has been a
Deputy Director of the Commission on Science, Technology, and Industry
for National Defense (COSTIND) since 1985. The Administration is
re-examining the APMT project, in part because the Chinese governmental
investors include those with ties to the military: COSTIND, China Launch
and Tracking Control, China Aerospace Corp., Ministry of Information and
Industry, and China Telecommunications Broadcasting Satellite Corp.
(Chinasat). Some are concerned about that the APMT satellite could be
used by the Chinese military to improve command and control and that the
satellite contains sensitive technologies, including a huge 40-ft.-wide
antenna and on-board digital processor, also used in Hughes' classified,
communications satellites used by the U.S. military.

7/18/98:
China launched Sinosat-1 (built by French companies, Alcatel and
Aerospatiale) on a LM-3B rocket.

Other events since June 1998:

6/23/98:
Senate hearings reveal that Defense Department monitors were not present
during many Chinese launches of American satellites between 1994 and
1996—even before the transfer of export control to the
Commerce Department.

6/24/98:
Hearing in the House reveal that a top-secret circuit board was missing
after a failed Chinese launch of a Loral satellite. After the rocket
carrying the satellite exploded shortly after take-off, the Chinese
barred American officials from the crash site for five hours. When
Americans were finally allowed in, the supersecret encoded circuit board
was missing. It is also learned that the Justice Department has begun
another investigation of a second failed China rocket launch that
carried an American satellite.

6/26/98:
The New York Times reports on newly released portions of a 1997
Pentagon memo that concluded Loral and Hughes had harmed national
security in sharing information with Chinese rocket scientists. The memo
contends that Loral and Hughes had committed three "major" security
breaches, three "medium" violations, and 12 "minor" violations. The
Times reports: "All the infractions involved assistance American
technical experts gave the Chinese to help solve problems with their
rockets' guidance and control systems, an area of weakness in China's
missile programs."

7/15/98:
The bipartisan Commission to Assess the Ballistic Missile Threat to the
United States, chaired by former Secretary of Defense Donald Rumsfeld,
submits its final report to Congress. The conclusions of the Rumsfeld
Commission contradict a controversial 1995 National Intelligence
Estimate (NIE), which stated that there was no missile threat to the
continental U.S. for fifteen years.

7/21/98:
The Washington Times reports that the Chinese have manufactured 6
new long-range ICBMs—a one-third increase since the beginning of the
year of their stock of missiles capable of striking the U.S.

7/22/98:
It is revealed that the Chinese military conducted missile tests while
President Clinton was in China during his official June 27 to July 3
visit.

8/8/98:
The State Department suspends work on a joint satellite launch project
between Boeing and Russian and Ukrainian engineers. State suspends the
project after concluding that "sensitive U.S. space information was
improperly disclosed."

8/9/98:
The Washington Post reports that Hughes Corp. is "intensely
lobbying the Clinton administration for permission to proceed with a new
telecommunications satellite deal with China despite the concern in
Congress over technology transfers that could help the Chinese
military."

5.

Glossary of Terms

Major Organizations –
U.S. Government

Defense Technology Security Agency:
The DTSA is charged with guarding the nation’s military and technological
secrets and had a prominent role in the approval of technology transfers
during the Reagan and Bush administrations. Observers have noted that the
influence and importance of the agency has diminished during the Clinton
administration, especially when authority over export waiver was shifted to
the Commerce Department. The function of the DTSA is to be combined with
three other defense agencies starting October 1998. According to Defense
Week: "The Defense Threat Reduction Agency (DTRA) would consolidate the
functions of three existing agencies: the On-Site Inspection Agency, the
Defense Special Weapons Agency, and the Defense Technology Security Agency,
according to a draft Pentagon directive establishing the agency." Some view
this as an attempt to dismantle the agency.

Export Controls–Departments of Defense,
Commerce, and State: In November of
1996 President Clinton transferred authority over technology export
licensing from the State Department to the Commerce Department. Former Bush
advisor Tina Silverman noted that the "transfer of this function shifted the
balance of interests away from the protection of sensitive technologies in
favor of commercial interests."

Before this transfer of authority to
Commerce, the Defense Department had a "veto" power over waiver and license
decisions—their main concern, of course, being national security. After the
change, the Commerce Department assumed responsibility for licensing the
export of all commercial communications satellites. According to press
reports at the time, the State Department, with support from the Department
of Defense, initially opposed the shift in licensing jurisdiction because of
the existence of certain militarily-sensitive technologies embedded within
the satellites. Former Secretary of State Warren Christopher has noted that
he argued to retain State’s licensing role.

As it stands now, DOD is only one of many
agencies responsible for technology licensing decisions. Any national
security objections they raise must be supported by a majority of the
agencies involved in the interagency review process. The GAO has testified
that under the current Commerce-headed system, "Defense’s power to influence
the decision making process has diminished . . ."

[Note on Export Controls: Recent hearings
jointly held by the House International Relations and National Security
Committees found that several U.S. satellite launches by China took place in
1995 and 1996 without Department of Defense monitors—even before the
jurisdiction shift on export controls.]

Arms Control and Disarmament Agency:
The ACDA is part of the interagency review process that determines export
waivers for technology transfers. Its mission is to "strengthen the national
security of the United States by formulating, advocating, negotiating,
implementing and verifying effective arms control, nonproliferation, and
disarmament policies, strategies, and agreements. In so doing, ACDA ensures
that arms control is fully integrated into the development and conduct of
United States national security policy."

Office of Defense Trade Controls:
DTC is part of the State Department. According to the Journal of Commerce,
the DTC "serves as a gatekeeper for U.S. technology and a guardian against
the spread of weapons of mass destruction. It is also an export licensing
agency." The Journal also reports that aerospace industry sources
"say DTC officials have stubbornly resisted the president's March 1996
decision to transfer the licensing of satellites for foreign launches to the
Commerce Department, fearing that China will obtain missile technology
through eased controls."

Interagency Review:
A general term applied to the process by which different cabinet agencies
arrive at administration policy. In the case of technology exports to China,
when the Clinton administration transferred authority over exports from the
State Dept. to the Commerce Dept., the administration also re-arranged the
interagency review process concerning technology transfers. Instead of the
Defense Dept. having a "veto" over other agencies in the technology transfer
process, all national security objections had to be supported by a majority
of agencies involved in the interagency review—effectively striping Defense
of its veto power.

Munitions List:
Maintained by the State Department and the Department of Defense, the
"munitions list" is an inventory of America’s "most sensitive military and
intelligence-gathering technology." Officially, the Munitions List is
Section 38 of the Arms Export Control Act.

Commerce Control List:
Satellites were placed on the Commerce Control List when the Clinton
administration transferred authority over satellite exports from the State
Department to the Commerce Department.

Chinese Academy of Space Technology:
This organization is the equivalent of America’s NASA. According to several
published reports, the academy has announced plans to launch a manned
spacecraft and a small lunar probe within the next few years.

China Great Wall Industry Corporation:
China’s company that market’s space launch services. Owned by China
Aerospace Corporation, it develops strategic and tactical ballistic
missiles, space launch vehicles, surface-to-air missiles, cruise missiles,
and satellites. Great Wall was sanctioned by the U.S. in 1991 and 1993 for
exporting M-11 missile parts to Pakistan.

China International Trade and Investment
Corporation (CITIC): Chinese
state-run venture and primary overseas trading company with a stake in
American satellite business. Its chairman, Wang Jun, attended Democrat
fundraising "coffees" at the Clinton White House in 1997. It is reported
that on the very day of his visit to the White House, President Clinton
"signed waivers allowing the Chinese to launch four American
satellites—though unrelated to the business interests of China International
Trade." (see "Wang Jun")

Major Players –
Campaign Contributions

Bernard Schwartz:
Chairman of Loral Space and Communications and top contributor to the
Democrat National Committee in 1997.

C. Michael Armstrong:
Former Chairman and CEO of Hughes Aircraft Company; member of the
President’s Export Council. In 1993, he lobbied the Clinton administration
to exempt commercial communication satellites from the sanctions imposed on
China for transferring M-11 missile parts to Pakistan.

Liu Chaoying:
Executive of China Aerospace and daughter of retired General Liu Huaqing, a
senior Chinese official and member of the Communist Politburo. She holds the
honorary rank of lieutenant colonel in the People's Liberation Army.

Wang Jun:
Chairman ofChina International Trade and Investment Corporation.
"Attended a White House coffee with President Bill Clinton at the same time
his company was suspected of smuggling guns into the United States; Clinton
later said it was ‘clearly inappropriate’ for Wang to be there and ordered
tighter screening of White House guests."

Nuclear Terminology

Nonproliferation:
The goal of preventing additional nations developing nuclear weapons than
already have it; the intellectual framework upon which several international
arms control and arms monitoring agreements are based.

Missile Technology Control Regime (MTCR):
The MTCR is an informal export control arrangement among 29 of the world’s
most advanced suppliers of ballistic missiles and missile-related materials
and equipment. The regime is designed to stem the spread of ballistic and
cruise missiles capable of delivering a 500-kilogram payload 300 kilometers
or more, by establishing a common export control policy (the Guidelines) and
a shared list of controlled items (the Annex) that each country implements
with its own national legislation. China has promised to adhere to the MTCR,
but is not a member.

Rockets and Missiles

ICBM:
Inter-continental ballistic missile. Used to deliver nuclear or other
explosive payloads at long ranges; similar to, but not to be confused with
rockets (such as China’s Long March) used to put payloads into space.

M-11 Missile:
Chinese short range ballistic missile with a range of 186 miles. The U.S.
has twice sanctioned China this decade for exporting M-11 missile parts to
Pakistan.

Long March Rockets:
Chinese rockets used to launch commercial satellites into orbit. Until
recently, Long March missiles were considered unreliable. Long March rockets
exploded after take-off in 1992, 1995 and 1996, destroying satellites built
by Hughes and Loral.

CSS-4 Missiles:
Long range strategic missiles with the capacity to deliver nuclear warheads.
They are estimated to have a range of 8,078 miles. The Central Intelligence
Agency reports that 13 out of China’s 18 CSS-4 missiles are aimed at U.S.
targets.

MIRVs:
Multiple independently targeted reentry vehicles. A crucial technology that
allows multiple nuclear weapons to be released from a single missile. MIRV
technology dramatically increases the potency and accuracy of a missile
after it is launched and is also used to assist in the deployment of
satellites.

6.

Technology
transfer authority given to Commerce Department

This New York Times article explains
the decision making process behind the Clinton administration’s transfer of
control over sensitive technology exports from the State Department to the
Commerce Department. Many have observed this decision contributed to a
weakening of national security priorities.

HOW CHINESE WON
RIGHTS TO LAUNCH SATELLITES FOR U.S.

Tie To Donations Denied

Easing of Rules in 1996 Was a
Shift of Balance Between Security and Commerce

The New York Times

May 17, 1998, Sunday, Section
1; Page 1; Column 1

BYLINE: By Jeff Gerth and David E. Sanger

DATELINE: WASHINGTON, May 16: On Oct. 9,
1995, Secretary of State Warren Christopher ended a lengthy debate within
the Clinton Administration by initialing a classified order that preserved
the State Department's sharp limits on China's ability to launch
American-made satellites aboard Chinese rockets.

Both American industry and state-owned
Chinese companies had been lobbying for years to get the satellites off what
is known as the "munitions list," the inventory of America's most sensitive
military and intelligence-gathering technology. But Mr. Christopher sided
with the Defense Department, the intelligence agencies and some of his own
advisers, who noted that commercial satellites held technological secrets
that could jeopardize "significant military and intelligence interests."

There was one more reason not to ease the
controls, they wrote in a classified memorandum. Doing so would "raise
suspicions that we are trying to evade China sanctions" imposed when the
country was caught shipping weapons technology abroad—which is what happened
in 1991 and 1993 for missile sales to Pakistan.

The Secretary of State’s decision to keep
satellites on the munitions list, making it harder for them to be exported,
did not stand for long. Five months later, President Clinton took the
unusual step of reversing it.

Control of export licensing for
communications satellites was shifted to the Commerce Department, then run
by Ronald H. Brown, who was deeply interested in promoting American
businesses overseas and had been one of the Democratic Party's key
fund-raising strategists. Several licenses have since been approved.

A reconstruction of Mr. Clinton’s decision
to change the export control rules, based on interviews and documents, shows
that it followed a turf war between the State and Commerce Departments, and
a broader debate over how to balance America's security concerns and
commercial competition in the hottest of all the emerging markets.

It also illustrates the intersection of the
interests of both large American donors and surreptitious foreign donors to
the 1996 campaign.

Both American satellite makers and the
Chinese were delighted with the decision because the Commerce Department has
dual responsibilities: licensing sensitive exports and promoting sales of
American goods around the world.

One of the beneficiaries of that decision,
it now turns out, was China Aerospace because its rockets could launch
American satellites. An executive of the state-owned Chinese company, Liu
Chaoying, is said to have provided tens of thousands of dollars from Chinese
military intelligence to the Democratic Party in the summer of 1996.

Ms. Liu's involvement was described to
Federal investigators recently by Johnny Chung, a Democratic fund-raiser who
says he took $300,000 from Ms. Liu – who is also a lieutenant colonel in the
Chinese military -- and donated almost $100,000 of it to Democratic causes,
apparently keeping the rest for his businesses.

President Clinton's decision was announced
in March 1996, several months before the donations were made. But the actual
change was delayed until the fall.

The White House said it did not know the
source of Mr. Chung's donations and denies that the decision was influenced
by campaign donations, domestic or foreign.

"This was motivated by competitiveness and
streamlining bureaucracy concerns, and nothing else," Samuel R. Berger, Mr.
Clinton's national security adviser, said in an interview two weeks ago.

On Friday, Mr. Berger's spokesman, Eric
Rubin, said the decision was also part of the Administration’s China policy,
and specifically its effort to encourage China to clamp down on military
exports.

"On many occasions, this was discussed with
the Chinese Government because we believe that policy on satellite licenses
is one of the tools we have to strengthen our nonproliferation policy," Mr.
Rubin said.

Mr. Clinton's decision took place after
months of tension with Beijing.

In January reports of China's export of
nuclear technology to Pakistan and missiles to Iran caused considerable
concern in Congress and the Pentagon. In early May, two months after Mr.
Clinton reversed the Secretary of State, the Administration said China had
agreed to curb its missile and nuclear exports. But that announcement was
greeted with considerable skepticism by Republican critics, including Bob
Dole, who was well on the way to getting the nomination for President.

During the campaign, the Republicans
attacked Mr. Clinton for failing to curb China's sales of nuclear and
missile technology to other countries.

The satellite decision in March was one
element of the Administration's "carrot-and-stick-approach to working with
China," said James Lilley, a former United States Ambassador to Beijing.

But in the way business and diplomacy mix in
Washington’s dealings with China, the decision also resonated in boardrooms
on both sides of the Pacific. It satisfied the commercial interests of the
American aerospace industry, which had long sought access to China’s
low-cost ability to launch satellites into space, aboard rockets called the
Long March.

And it bolstered China’s own commercial
interests. Ms. Liu’s parent company, China Aerospace, owns a large piece of
a Hong Kong satellite operator. It also owns the China Great Wall Industry
Corporation, the rocket company that launches both private satellites and
tests and provides equipment for the missiles in China’s nuclear arsenal. It
was Great Wall that the State Department sanctioned in 1991 and 1993 for
selling missiles to Pakistan.

Other powerful Chinese state enterprises
also had multibillion-dollar stakes in getting access to American
satellites. Among them was the China International Trade and Investment
Corporation, whose chairman, Wang Jun, gained unwanted attention in the
United States last year when it was revealed that he attended one of Mr.
Clinton’s campaign coffee meetings in the White House. The day of Mr. Wang’s
visit, Mr. Clinton, in what Mr. Rubin said was a coincidence, signed waivers
allowing the Chinese to launch four American satellites—though they were
unrelated to the business interests of China International Trade.

"Any suggestions that these decisions were
influenced by Wang Jun's presence in the U.S. is completely unfounded," Mr.
Rubin said.

It is not known what motivated Ms. Liu or
the Chinese military to make the donations. Ms. Liu’s father, Gen. Liu
Huaqing, was not only China’s highest military officer but a member of the
leadership of the Communist Party.

The White House and the Democratic National
Committee deny any knowledge of the source of Mr. Chung’s $366,000 in
donations, most predating his connection with Ms. Liu, and all of which was
returned.

But there is no doubt that American
companies—partners and suppliers of China International Trade and China
Aerospace—put enormous pressure on the White House. They were also important
campaign contributors. For example, the chief executive of Loral Space and
Communications gave $275,000 between November 1995 and June 1996 to the
Democrats.

The Precursor

A Lobbying Effort To Persuade Bush

China’s drive to obtain a steady stream of
satellite technology from the United States preceded the Clinton
Administration’s arrival in Washington.

In 1990, just a year after the killings at
Tiananmen Square, officials from China Aerospace and the Chinese Government
approached Mr. Lilley, the American Ambassador, pressing for President Bush
to waive restrictions enacted in the aftermath of Tiananmen that barred
China from launching American satellites.

"They hit me very hard," Mr. Lilley recalled
recently. "It was a prestige national program. It was putting China on the
map as the big space country of the 21st century."

Mr. Bush, who became America’s first
permanent representative in Communist China in 1974, granted a waiver that
allowed a launching on one of China's Long March rockets. In 1992, a number
of Senators—including Al Gore, then still a Senator from Tennessee—wrote to
the Bush Administration warning that China was using the launchings to "gain
foreign aerospace technology that would be otherwise unavailable to it."

In the last days of the 1992 Presidential
campaign, Mr. Gore made the waivers an issue, contending that President Bush
"has permitted five additional American-built satellites to be launched by
the Chinese."

"President Bush really is an incurable patsy
for those dictators he sets out to coddle," Mr. Gore said in a speech at the
Goddard Space Flight Center in Greenbelt, Md.

The Argument

Business Leaders Pressure Clinton

Almost as soon as Mr. Clinton took office,
business leaders began their campaign to drastically change his views about
China.

Both Chinese and American companies were
working to get satellites off the State Department’s munitions list. The
rules for exporting goods that are on the list are particularly tough.
Congress must be notified 30 days in advance. Moreover, the State Department
considers only nonproliferation issues and defers to the Pentagon’s
judgments.

In contrast, the Commerce Department’s
export-control administration solicits a host of views and must weigh the
effects of its decisions on America’s competitive position.

Mr. Christopher’s aides also noted in their
1995 classified memorandum that "U.S. firms remain concerned there could be
additional sanctions imposed on China precluding future munitions licenses,"
exactly the kind of sanctions that had been only recently lifted for China
Aerospace’s subsidiaries.

And there was a lot at stake: an estimated
14 commercial communications satellite launchings a year worldwide, costing
several hundred million dollars apiece.

"The business community regarded the
inclusion of civilian satellites on the munitions list as an insult," said
William A. Reinsch, the Under Secretary of Commerce for export control, who
fought Mr. Christopher’s decision. "We're the only country that treats them
that way."

The Chinese also understood that they had a
huge stake in the outcome of the decision. Zuoyi Huang, president of the
California subsidiary of China Great Wall, a part of the China Aerospace
empire, said in an interview that his company was eager for any changes that
would insure easier access to American technology.

"The license takes time," he said. "You have
to get a waiver from the President. The customers can't wait. It's just pure
commercial use. It's not a military threat to the United States."

The Review

A Decision Against And a Quick Appeal

The arguments came to a head in 1995. C.
Michael Armstrong, then the chief executive of Hughes Electronics and newly
chosen as the head of President Clinton’s export council, asked to meet Mr.
Christopher. He urged that satellites, which his company produces, no longer
be treated as military goods.

The Secretary of State promised that he
would conduct a detailed review in consultation with the Department of
Defense, the C.I.A. and the National Security Agency and the Department of
Commerce.

But the majority of the interagency group
quickly found itself at odds with the aerospace industry. A major issue was
how to protect encryption equipment, which is built into a satellite and
interprets instructions from ground controllers who manipulate the satellite
once it is in orbit. Similar devices are used to communicate with American
spy satellites, and the Pentagon and intelligence agencies worried that
anyone who could crack the code could take control of the satellites
themselves.

On Aug. 17, 1995, a memorandum prepared for
the interagency group noted that the chief executive of a satellite company
told Mr. Christopher that "once it is embedded in the satellite, the
encryption device has no military significance." Thus, the industry argued,
there was little risk that the Chinese would get their hands on the
encryption devices—especially because American military officials are
supposed to watch the satellites with care when they are in Chinese hands.

But, the memorandum went on, "the national
security position" is that "the nature of the device itself," not its
location, "should be used to determine whether it must be controlled as a
military item."

The encryption issue was one of the main
reasons the interagency group—over the objections of the Commerce
Department—recommended that satellites remain on the munitions list. Mr.
Christopher concurred. Soon after Mr. Christopher put his initials on the
decision memorandum, Commerce Secretary Ronald H. Brown appealed the
decision to the President.

The Turnaround

The Commerce Dept. Wins a Turf Battle

The debate surrounding the appeal did not
heat up for four months. The nature of the arguments that went to the White
House is still unclear: many of the documents remain classified. But those
that have been reviewed by The New York Times show that the White
House and the Commerce Department began communicating again about the issue
on Feb. 8, 1996, two days after President Clinton broke a backlog of
applications for launchings by China, by approving four of them that day.

Mr. Clinton signed those waivers the same
day that Wang Jun, the man who was often referred to during the campaign
finance investigations as a "Chinese arms dealer," visited Washington. His
company, the China International Trade and Investment Corporation, has a
multibillion-dollar stake in one of Hong Kong’s largest satellite companies.

That same day, Mr. Wang met with Mr. Brown,
at his expansive office in the Commerce Department. And that evening, Mr.
Wang attended a coffee at the White House, an event Mr. Clinton later called
"clearly inappropriate." Others at the coffee said Mr. Wang never spoke
during the session.

By mid-February, for reasons that are still
murky, there seemed to be some urgency at the White House to decide whether
to reverse Mr. Christopher’s decision, shifting satellite export licensing
to the Commerce Department.

A Feb. 15 State Department memorandum talks
about speeding up the process because "the Administration wanted to wrap
this up."

In the end, the State Department relented.
Participants in the final debate said that the President concluded that the
technology could be protected through the Commerce Department, just as the
department protects supercomputers and other sensitive technologies.

The President's decision was announced on
March 14. Commerce officials, who had just won one of Washington’s nastiest
turf wars, were jubilant.

"Good news," officials were told by E-mail.
The electronic message went on to recommend a "low key" spin on the news
that would "not draw attention to the decision."

Internal Commerce Department documents show
that officials were anticipating questions from reporters and Congress about
whether the decision represented an effort to ease technology transfers to
China and remove items from sanctions—some of the same concerns that figured
in Mr. Christopher’s decision.

In the days preceding the announcement,
China had raised tensions with its Asian neighbors and the United States to
new heights, firing M-9 ballistic missiles, which carried dummy warheads,
into target zones 30 miles off the shore of Taiwan.

The March 14 announcement said that
regulations putting into effect the President’s decision would be issued
within 30 days. But the bureaucratic infighting continued.

Finally, the State Department issued the
regulations shifting most satellite licensing to the Commerce Department.

They were published on Nov. 5, 1996, the day
President Clinton was re-elected.

Many defenders of the administration’s
liberalized technology transfer policies claim they were merely acting
consistent with policies established during the Reagan and Bush eras. While
it is true that those previous administrations established export control
policies, the two columns that follow—both written by veteran defense policy
experts—show that the Clinton administration’s decision to shift these
controls from the State Department to the Commerce Department represented a
dramatic shift in U.S. policy.

TECHNOLOGY
TRANFERS UNLIMITED?

Washington Times

June 15, 1998

Section: Part A;
Commentary Op-ed; Pg. A21

BYLINE: Tina S. Silverman

BODY: Sen. Richard Shelby, chairman
of the Senate Intelligence Committee, has announced that he intends to
invite officials from the Reagan and Bush administrations to testify in the
matter of Chinese launches of U.S. satellites. This is a welcome decision in
light of the Clinton administration's insistence that its decision to grant
an export license to the Loral Corp. for a Chinese satellite launch is
consistent with prior authorizations granted by Presidents Reagan and Bush.

Mr. Shelby's witnesses are sure to
show that this was not just business as usual.

During the latter part of the Bush
administration, I was responsible for coordinating the U.S. government's
position for the launch of American commercial satellites on Chinese
missiles. This was in accordance with an agreement that had been reached in
1989 between the United States and China. Implementation of the agreement
was contingent upon the Chinese fulfilling clearly defined obligations with
respect to trade and technology transfer. Today, as the Clinton
administration implements the agreement negotiated by its Republican
predecessors, serious allegations are being raised about a potential breach
of national security and exercise of political influence that undermine the
integrity of our government's policy-making process.

Yes, the agreement to allow exports
of U.S. commercial satellites for launch by the Chinese was initiated by the
Republicans. The objectives were to promote reform in China by opening
international communications and trade, and to assist our own industry to
remain competitive. But the parameters with respect to balancing American
commercial interests and national security were well defined. National
security was foremost in the policy calculations. Never was there any
question, as is the case today, as to whether campaign contributions by U.S.
or foreign entities would affect our internal decision-making process. And,
as is the case today, there was no Justice Department investigation underway
involving the potential illegal transfer of ballistic missile technology by
a U.S. company to China overshadowing the deliberations.

Therefore, while the policy
framework followed from Mr. Reagan to Mr. Bush to Mr. Clinton, the
circumstances under which Mr. Clinton agreed to grant the Loral Corp. an
export license are unlike anything that had occurred previously. Any
comparison should be viewed as a transparent and cynical attempt to minimize
the potential harm to national security and the damage to the nonpolitical
interagency review process used to approve such transactions.

At that time the export of
commercial satellite technology was controlled by the State Department and
was considered a "Munitions List Item," meaning that its export was deemed
critical to national security because of the potential military use of the
technology. But in 1996, Mr. Clinton, at the urging of U.S. industry, and
over the objections of Secretary of State Warren Christopher, transferred
jurisdiction over export approval of this technology to the Commerce
Department. The allegation that this was done in response to campaign
donations by the chief executive officer of the Loral Corp., who during the
1990s has been the single largest donor to the Democratic Party, is a
concern. But of even greater concern is the allegation of campaign
contributions to the president's reelection by agents to the People's
Republic of China. The fact is that the transfer of this function shifted
the balance of interests within the federal bureaucracy away from the
protection of sensitive technologies in favor of commercial interests.

This was highly significant in that
it sent a clear signal to the Chinese government, U.S. industry and our own
bureaucracy that a major shift in U.S. policy had occurred. Commercial
interests would take precedence over U.S. security concerns in technology
transfer decisions.

To those unfamiliar with the
internal workings of the U.S. policy process, government decisions may
appear to be monolithic. In fact, each Cabinet department functions as a
special-interest group fighting for its particular constituency. Commercial
interests may be at odds with specific diplomatic considerations, or labor
constituencies or national security.

While everyone is working in the
best interests of the nation, nevertheless it is from a particular vantage
point. The outcome is usually a compromise that will satisfy the various
constituencies and be in the national interest. This interagency review
process is integral to U.S. policy process and involves career civil
servants, military personnel and policy appointees. During the Reagan and
Bush years, it was this process that determined how we implemented the
launch agreement, not the reported influence on our commander in chief of
external political and foreign donors.

The Interagency Working Group dealt
with Chinese compliance with those terms of the agreement related to how
China priced its launches and to China's compliance with missile technology
controls. After recommendations from this review group, the president would
make a determination as to what was in the national interest.

Anyone in the Clinton
administration involved in this interagency decision process would certainly
have received the message that the transfer of authority for satellite
technology to the Commerce Department over the objections of the secretary
of state signaled a major shift in policy direction. Moreover, the
administration has greatly diminished the effectiveness of the Defense
Department's Technology Security Agency during its tenure, an office that
was a watchdog for technology transfer under Mr. Reagan and Mr. Bush.

While I have not been privy to the
interagency debates that have taken place in the Clinton administration,
having been involved in the process myself, I find it hard to imagine that
the individual staffers responsible for making policy recommendations would
not have foreseen the direction in which their deliberations would
invariably have led them, based on their own personal job security
considerations. Last Sunday night's "60 Minutes" interview on this very
issue did in fact present two federal employees who believe they were
hampered in their attempts to perform their respective duties in the Defense
and Commerce departments.

The Chinese government closely
monitors the U.S., our elections and the political process. The extent to
which the Chinese leadership has any real comprehension about how our
democracy functions is unclear. If the allegations of wrongdoing prove true,
then the Chinese government believed that U.S. policy was for sale. The
congressional committees looking into this matter will have to determine the
extent of any wrongdoing in this matter, but as an outsider now looking in,
I have to wonder whether the government's interagency review process has
not, at least in this matter, become nothing more than a rubber stamp for
the administration's need to please big political contributors.

Tina S. Silverman was
principal advisor on defense trade in the office of the United States Trade
Representative (USTR) from 1991-1993.

SELLING
CHINA THE ROPE

Clinton Didn't Start It,
But He Sure Made It Worse

By Henry Sokolski

Weekly Standard

June 1, 1998

Presidential spokesman Mike McCurry
last week justified the Clinton administration policy that allowed the
transfer of satellite technology to the Chinese military with the hoary
"they started it" defense. "This administration," said McCurry, "has pursued
the exact same policy pursued by the Bush administration."

This is not really a defense of the
policy, of course, but is it true? Republican officials, as we shall see,
were not without sin. But you might say that they worried enough to go to
confession: They tried to control against the leaking of sensitive
technology in their dealings with China by at least monitoring and limiting
the transactions. Not so the Clinton administration, which from 1993 on not
only showed contempt for enforcing existing satellite controls but loosened
them so as to make it all but impossible to know whether they were being
violated. You might say they not only skipped confession, but burned the
church down.

Today's controversy surrounds what
the Chinese have managed to learn through launching satellites made by two
American companies, Loral Space and Communications and Hughes Electronics.
Details of a federal grand-jury investigation have been leaked to New York
Times reporter Jeff Gerth and others that make this much clear: In February
1996 a Chinese Long March rocket carrying a Loral-made satellite blew up
shortly after liftoff. In an effort to clarify to insurers who was to blame
for this accident, analysis done by Loral and Hughes was presented to the
Chinese, which the U.S. Defense Department later determined could help China
perfect more reliable, accurate, long-range ballistic missiles. (According
to a CIA report leaked this spring, 13 Long March missiles with nuclear
warheads are aimed at American cities.) The federal grand jury is now trying
to determine what, if any, U.S. export-control laws may have been broken.

This story has exploded because of
the tandem revelations that the Chinese military may have made illegal
campaign donations to aid Clinton’s reelection and that Loral’s CEO is a top
donor to the Democratic party. Despite Justice Department warnings that he
might undermine the grand-jury investigation of Loral, the president went
ahead earlier this year and allowed the company to transfer an additional
satellite to China. Eager to connect the dots of the scandal, the House last
week voted 364 to 54 to suspend all transfers of U.S. satellites to China.

Focusing on the money is exciting,
but probably misses the point when it comes to assessing the potential
damage done to national security. In fact, not just Loral and Hughes, but
Lockheed Martin, Motorola, and Martin Marietta have all worked closely with
the Chinese launch industry—work which began not in 1996, but nearly a
decade ago in 1989. And all of this history (not just the 1996 Loral-Hughes
case) bears investigating. There is no way to judge the administration's
performance in the Loral-Hughes matter without knowing what was attempted by
prior administrations.

It was Ronald Reagan, after all,
who first allowed the launch of U.S.-made satellites on Chinese rockets,
after the Challenger space shuttle crash in 1986 deprived the satellite
industry of launch alternatives. And it was George Bush who waived Tiananmen
Square sanctions to allow the

Chinese launch of up to five
U.S.-made satellites, three of which—all made by Hughes—were launched before
he left office.

If this larger record is examined,
three points emerge. First, all of our satellite transfers have helped China
perfect its military rocketry. China’s launching of U.S.-made
satellites—worth up to a half-billion dollars in revenue to date—has helped
finance China's own missile-modernization efforts and missile exports to
nations like Pakistan and Iran. It also has given the Chinese access to U.S.
rocket know-how. U.S. contractors have a natural inclination to tutor the
Chinese on what they should do to make their crude rockets precise and
reliable (they don't want to lose their satellites, which are worth up to 10
times the value of the launcher). Anticipating this, State and Defense
officials drew up strict rules in the late 1980s covering precisely what
information companies could share with the Chinese. These rules required
monitoring of all contractor-Chinese exchanges (including discussions) by a
U.S. government rocket-engineer enforcement agent.

Did this prevent militarily useful
information from being conveyed to the Chinese? No. But because all
exchanges were monitored, there was a clear record of what was conveyed and
a concerted effort to keep such transfers to a minimum. Were there
infractions? Yes, but when they were reported, senior officials in the
Defense and State departments reprimanded the contractors and got them to
stop. Yet despite these enforcement measures, a number of key technologies
were transferred before 1993. Clean-rooms were constructed in China to
assure Hughes's sensitive communications satellites wouldn’t be ruined by
dust, humidity, or major temperature changes before they were launched. And
clean-room technology, as it happens, is also crucial in preparing any
advanced system for launch, including reconnaissance satellites and complex
warhead packages.

In an attempt to clear up liability
for two launch failures in 1992, U.S. contractors also discussed how to
improve Chinese payload farings (the nose cone at the rocket's top that
shields the satellite) and attitude and engine controls, which fire the
rocket's stages and keep them and the payload (either military or civilian)
at the precise angles required for proper functioning. Finally, each launch
of a Chinese Long March vehicle helped improve the reliability of China's
intercontinental ballistic missile fleet, since the rockets are the same.

Republican officials, then, had a
spotty record, with the advantage that they worried about it and tried to
enforce the law. By the end of the Bush administration, proposals were made
to loosen controls over satellite transfers. Whether they would have
succeeded no one can know, because the 1992 elections intervened.

The industry, however, correctly
sensed that with Clinton's election the time for pushing for decontrol was
ripe. Their first step came in late 1993 when they asked the Commerce
Department to persuade the White House to drop government monitoring of
contractors’ discussions with the Chinese. They wanted to share, unimpeded
by monitors, a key technology known as "coupling load analysis." The crude
Chinese rockets were originally designed to be so rigid that vibration from
the rocket's separating stages and engines risked shattering delicate
satellites of the sort the U.S. companies would want to launch (and the
Chinese would want to develop later on their own). Using coupling load
analysis, the Chinese could "soften" their launchers, allowing them to carry
more sensitive payloads—be it satellites or the latest in highly accurate,
multiple-warhead systems.

The space industry was so eager to
share this technology, it lobbied Congress and the executive branch
throughout 1993 to be given a free hand to do so. Meanwhile, government
monitors continued to file compliance reports on a host of issues. Now,
however, their concerns were handled differently: Where before senior State
and Defense officials took action, now little or nothing happened. Word got
out: Increasingly, industry officials disobeyed government guidance, shared
their know-how with the Chinese, and discovered that contempt for the law
paid off.

By 1995, the satellites being
launched by the Chinese were more sophisticated. One of these, AsiaSat 2, a
communications satellite made by Martin Marietta, was to be placed in its
orbit with a Chinese solid-rocket kick motor—a final rocket stage strapped
to the satellite itself. This kick motor’s propellant had to be configured
with extreme precision to ensure that it would propel the satellite to an
exact point in space and no further and that it would do so without
shattering the satellite through vibration or jolts of acceleration.

Martin Marietta and its Hong Kong
customers were concerned that the Chinese kick motor might not be capable of
such precision. They asked State if they could witness a Chinese test-firing
of the motor. Their wish was granted. What’s unknown is what, if anything,
was then said to the Chinese engineers by the company's foreign staff, who
are not bound by U.S. restrictions. Were they briefed by the contractor? Did
they speak with the Chinese or otherwise convey U.S. solid-rocket propulsion
know-how? We don't know. Why might it matter? Perfecting kick motors can
also help in China’s development of a warhead-delivery system known among
experts as a "post-boost vehicle"—which is designed to penetrate missile
defenses. Boosting a satellite up into a precise position in space with a
kick motor is little different from blasting warheads off their predictable
course down through space and the atmosphere.

The good news in this case is we
may have a clue whether this technology was leaked: Industry’s campaign to
do away with monitoring didn't fully bear fruit until 1996. In 1995, U.S.
law still required government monitoring agents, and compliance reports were
still being filed. This paper trail

and government monitoring work
didn’t grind to a halt until 1996. That’s when President Clinton quietly
removed virtually all commercial satellites and related technology from
State Department munitions controls (which required official monitors). The
responsibility was transferred to the Commerce Department, which (no
surprise) trusts industry to monitor itself.

In his defense of the Clinton
policy last week, Mike McCurry cited this transfer to Commerce as the one
change that distinguished the Clinton administration’s policy from Bush
administration practices. But the transfer to Commerce was no simple
"change." It was tantamount to a complete overthrow of the old
export-control regime.

It was under Commerce "controls"
that Motorola and Lockheed worked with the Chinese to launch a series of
small communications satellites known as Iridium. Two of these satellites at
a time were successfully launched on a Long March rocket with a
multiple-satellite dispenser of Chinese design. A host of issues about the
satellite dispenser were somehow addressed—from proper mounting and release
of the satellites to coupling load analysis and attitude control. And all
were resolved. The result? China now has mastered a technology virtually
interchangeable with that of multiple independently targetable warhead
vehicles (MIRV), a delivery system used on America's most advanced
intercontinental ballistic missiles. Indeed, the MIRV system that our
military uses today was borrowed from dispensers that the
commercial-satellite industry first developed.

One could go into greater detail on
the potential military significance of our satellite transfers to China. But
this much is already abundantly clear: Our national security demands that
Congress learn all the facts. This will require going beyond the narrow
legal question of whether Loral and Hughes broke the law in 1996. Indeed,
allegations of influence peddling by the Chinese and the contractors should
not divert attention from the crucial questions raised by a decade of U.S.
satellite commerce with China.

Among them are these: Have we
already given the Chinese everything of value (in which case, continued
satellite commerce could hardly do much harm)? Or is there more that they
need or want that we should control and protect? What, if anything, should
be done to improve enforcement of

controls and assure effective
executive-branch backing? Finally, is the spread of missile technology so
tied up in the transfer of satellites that we delude ourselves in trying to
control their transfer? Would it make more sense to accept this connection
and expand such trade, or in the case of China, cut it off entirely?

To get at these questions, Congress
will have to hold its own hearings—but it will need the time and depth and
expertise that can only come with the creation of an independent commission.
The commission and Congress, moreover, are unlikely to get anywhere if U.S.
contractors are unwilling to speak freely. Only they know what has actually
been transferred to the Chinese since 1996. To encourage them to be
forthcoming, Congress and the executive branch should grant contractors
immunity from prosecution. Meantime, a moratorium should be placed on
further transfers of satellites to China until the commission and Congress
get the answers they need. This will hurt industry only to the extent that
it drags its heels in providing information about past transfers.

Certainly, given the seriousness of
these matters, it would be shortsighted of Congress to focus exclusively on
the political and legal issues surrounding the 1996 Loral case. There is,
after all, a broader set of concerns at stake. The president is duty bound
to provide for the common

defense. Not until we know the
truth about the U.S. role in China's missile program can we know whether the
Clinton administration has met this most basic obligation.

Henry Sokolski, executive director of
the Nonproliferation Policy Education Center, was the top official for
nonproliferation issues in the Bush Defense Department.

8.

China targets
intercontinental ballistic missiles at United States

Despite President Clinton’s October 1996
claim that there is "not a single, solitary nuclear missile pointed at an
American child," the articles below reveal that not only have the Chinese
aimed 13 long-range strategic missiles at the United States, they have
dramatically increased the stock of these missiles since the beginning of
this year.

BODY: A new CIA report says that 13
of China's 18 long-range strategic missiles have single nuclear warheads
aimed at U.S. cities.

According to an intelligence
document sent to top policy-makers in advance of Secretary of State
Madeleine K. Albright's current visit to Beijing, the 13 CSS-4 missiles
aimed at the United States - with a range of more than 8,000 miles -
indicate that China views the United States as its major strategic
adversary.

That is contrary to the views of
some senior Clinton administration officials, who are seeking to build a
partnership with Beijing's rulers.

The remaining five CSS-4s, along
with scores of other shorter-range nuclear missiles, are targeted on
countries closer to China, including Russia, the officials said.

China has an array of strategic
missiles that U.S. military and intelligence officials say are targeted on
the United States or U.S. military forces deployed in Asia.

It could not be learned how the CIA
found out about the missile targeting on U.S. cities, but details about the
matter were contained in a top-secret report that was sent to senior U.S.
policy-makers two weeks ago.

China also has some 25 CSS-3
missiles with ranges of more than 3,400 miles, and it is developing two new
ICBMs: the 4,500-mile range DF-31 and an advanced ICBM that will be able to
hit targets up to 7,000 miles away.

Other Chinese nuclear missiles
include the 1,750-mile-range CSS-2 and the road-mobile CSS-5, which has a
range of 1,100 miles.

The Clinton administration has
tried twice unsuccessfully since 1996 to win Chinese approval of a mutual
"de-targeting" agreement. A similar pact was established with Russia in
1994. Critics say it is largely symbolic because the missile guidance
computers can be retargeted in minutes.

Instead of joining the
"confidence-building" de-targeting measure, the Chinese government pressed
the United States to adopt its policy of vowing not to be the first to use
nuclear weapons in a conflict.

The CIA report also undercuts
President Clinton’s often-used phrase that there are no nuclear missiles
targeted at the United States. In boasting of his administration's security
record, he said in one speech in October 1996: "There is not a single,
solitary nuclear missile pointed at an American child tonight. Not one. Not
one. Not a single one."

"I guess this blows away Clinton's
famous speech," Rep. Curt Weldon, Pennsylvania Republican and senior member
of the House National Security Committee, said in an interview yesterday.

"He can no longer say what we knew
all along, and his credibility is undermined by his own intelligence
agency."

Mr. Weldon said the president "has
used the bully pulpit to lull the American people into complacency about
strategic threats in a way that has not been seen for decades."

A Defense Intelligence Agency
report stated in 1996 that China was improving its CSS-4s and other
long-range missiles with upgraded guidance systems and increased accuracy,
propulsion and warheads, including the use of multiple warheads.

Richard Fisher, a defense analyst
with the Heritage Foundation, said it is not surprising that Chinese nuclear
missiles are targeted at the United States. "The Chinese have been targeting
the United States for many years," Mr. Fisher said, noting that the People's
Liberation Army and the communist leadership view the systems as "deterrence
against the United States."

The United States is believed to
have some of its nuclear force targeted against Chinese missile silos.

Mr. Fisher said the newer Chinese
medium- and short-range nuclear missiles also are a threat and are believed
to be "targeted on very important American and allied facilities in Asia."

"These constitute strategic systems
for the PLA," he said. "And they are investing a great deal of effort in
modernizing them."

China also is developing a new
class of long-range cruise missiles and is working to make its shorter-range
missiles more accurate, he said.

"As the administration is seeking
to enter into wider and deeper cooperation in space and missiles with China,
let’s not forget that China has consistently refused to join regimes of
civilized behavior in the strategic nuclear arena," Mr. Fisher said.

China is refusing to join the
29-nation Missile Technology Control Regime and also rebuffed U.S. proposals
to de-target, he said.

James Hackett, a former U.S.
government arms control official, said China's long-range missiles have the
capability of reaching most of the United States "with the possible
exception of Disney World" in Florida.

"They have produced great big
nuclear warheads for those missiles," he said. "And the only feasible use is
to destroy a big city. What they have built are city-busters that are
targeted on major American cities."

Mrs. Albright told reporters in
Beijing that the United States is reviewing whether to lift sanctions
imposed on China for its 1989 military crackdown on protesters in Tiananmen
Square. But she also played down differences and emphasized building a
"strategic partnership," the Associated Press reported.

A Chinese general suggested to a
former Pentagon official two years ago that the United States would not
intervene in Beijing's dispute with Taiwan because Washington cares more
about Los Angeles than Taipei, Taiwan's capital.

The remark was interpreted by the
former official as a threat to use a nuclear missile attack against
California, and he reported it to the president's national security adviser
in 1996.

The Washington Times

July 21, 1998

SECTION: Part A; Pg.
A1

HEADLINE: China adds 6 ICBMs to
arsenal: Plans 2 more before moving its only plant

BYLINE: Bill Gertz; THE WASHINGTON
TIMES

[in part]

BODY: China produced six new CSS-4
intercontinental ballistic missiles in the first four months of this year, a
one-third increase in its ICBM arsenal largely targeting the United States,
according to Pentagon intelligence officials.

Two more such missiles will be
built this year before China shuts down - and relocates - its sole ICBM
production plant as part of a major defense industry restructuring, the
officials told The Washington Times.

The CIA reported earlier this year
that 13 of China's 18 long-range nuclear missiles were targeted at U.S.
cities. At the summit last month, China promised to "de-target" the systems
away from the United States, although the change cannot be verified.

The production of eight new ICBMs
represents a dramatic increase in the number of long-range missiles in
China's arsenal. "This is missile production far beyond anything we have
seen from the Chinese in recent years," said one official.

The surge in production at the
Wanyuan underground ICBM production plant, located in a remote part of
central China, occurred between January and April.

The plant’s final two CSS-4 Mod 2
missiles will be delivered in the next several months to the People’s

Liberation Army nuclear forces, the
officials said.

According to the Pentagon
officials, the Defense Intelligence Agency circulated a report earlier this
month stating that China’s only ICBM production facility at Wanyuan will
shut down operations by the end of the year as part of a defense relocation
project expected to last several years.